not sure if this has been posted: winners in the next semi boom...
Winners in the Next Semiconductor Boom
SCOTTSDALE, Ariz.--(BUSINESS WIRE)--Feb. 19, 1999--In an interview published in Microsoft Network's MoneyCentral this week (http://moneycentral.msn.com/articles/invest/inter/3028.asp), Dr. Danny Lam, a Director of Fisher-Holstein, Inc. (FHI), identified potential winners of the emerging semiconductor boom.
Dr. Lam, the ''analysts' analyst,'' is the first to publicly identify the semiconductor market upturn in August, 1998, and also identified the PC market boom in September, 1998 which resulted in a near doubling of chip stock prices from their lows in July, 1998.
The interview with Dr. Lam focused on three issues. First, new growth drivers will create new winners (and also-rans) among chip manufacturers. Second, the present forecast for 1999 sales growth (about 11%) is too pessimistic. And finally, this boom is restructuring the industry to favor foundries.
His research suggests that there will be different drivers from those associated with traditional PC-based business, and a different set of companies will benefit, like STMicroelectronics (NYSE:STM - news), and Motorola (NYSE:MOT - news).
In the traditional PC arena, technology and market trends like the slow adoption of Direct Rambus (Nasdaq:RMBS - news) and the saturation of many PC markets are positioning the existing giants like Intel (Nasdaq:INTC - news) for a period of above average but slower growth.
While 1999 industry sales forecasts by analysts have increased over the past few months, Dr. Lam feels they may be too low. The acceleration of growth by these demand drivers may result in a combination of forces to drive semiconductor market growth above 20% this year.
Specifically, the shift in market drivers from PCs, a market which consumes volumes of commodity chips, to telecom, a rapidly growing market still typified by more proprietary and higher-margin chips.
The recent boom in digital signal processors (DSPs) manufactured by companies like Texas Instruments (NYSE:TXN - news), Lucent (NYSE:LU - news), Motorola and Analog Devices (NYSE:ADI - news) is an example of the new wave of companies benefiting from the coming boom in telecommunications.
Industry restructuring will change traditional fully integrated semiconductor manufacturers like Motorola and make them more profitable as they outsource more of their chip manufacturing to foundries. Taiwan Semiconductor Manufacturing (NYSE:TSM - news) will benefit from this and outperform the overall industry.
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