Brian,
Obviously, you've seen a long term chart showing DRAM prices. Yes, historically, they've fallen by 30% annually. And once they've fallen, they seldom bounce up for more than a month or so. Rather, the chipmakers have been forced to upgrade their technology taking DRAM technology to a new level. The Equipment makers have generally been more profitable than the DRAM makers.
Informed industry insiders see the current glut coming to an end during 1998. i.e. - Steve Appleton of Micron, as well as the analysts that these leaders talk to at Smith Barney, Lehman, IDC, DataQuest, etc. The overcapacity will be cured not only by a doubling of bit demand but also by shutting down obsolete and unprofitable fabs. Who am I to believe? Informed sources or AMAT thread bears?
When it comes to timing an investment decision, the Street isn't going to come to individual investors to verify that we all have taken our positions before the Street starts throwing money at the sector. Last time the Semi Equipment sector made it close to last place in the IBD sector list, it was in 1st place less than 6 months later.
Will that happen again? Yes, though I don't know the timing. It could happen sooner. It could take more than 6 months. But I do know that no one is going to come and tell me the precise instant that the bottom has been reached.
Best wishes,
Ian. |
