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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets!
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To: Mason Barge who wrote (6929)9/17/1998 5:14:00 PM
From: Ian@SI  Read Replies (3) of 10921
 
Mason,

Re: do you think the chip industry is dead, or in a lull?

First, I think the question should be rephrased. It's probably just as accurate to lump all types of chips into "the chip industry" as it was to lump all software, hardware, firmware, equipment and processes required to produce same into "the high tech sector".

At the very least, one should separate Memory from Processors. And even within those categories, there are various special niches with specific value added IP necessary to produce the chips.

All that said, there's clearly more capacity than demand as we all know. Efficiencies and upgrades seem to be growing the yield faster than the increased demand. I believe this will come to an end, that capacity utilization will again go up. Or, said in other words, lower priced chips spur demand which will cause the growth rate to increase (in unit volume at least).

There will always be "next generation" chips which will command a price premium. Current and trailing edge chips are priced like commodities to an ever increasing degree. The time that a chip seems to enjoy "next generation" status seems to be decreasing.

With those thoughts, my answer is:

Most parts of the chip industry are suffering from excess capacity (in a lull if you prefer). This is a self correcting situation.

What do you think?

Ian.
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