Robert:
I'm bearish on both.
Most semis, especially memory, end up in, or attached to, a PC. PC sales are in a terrible state and getting worse. There is no "pull" for memory products under this situation.
Making things worse, the semi producers are on a shrink binge. The speed with which they are adding more chips without new fabs is astounding. As an example, one of the largest memory producers in the world will have doubled production in 12 months. They are into the middle rounds of a bloody price war. 64 mbits are already into the $8. range and descending. We'll see $6. pricing before summer at this rate. None of them can or will make money. Supply side is overwhelming demand.
The semi equipment guys have picked up a few contracts but not enough to make their futures bright, nor near enough to support today's insane stock prices. AMAT, for example, has a weak order book (compared with two years ago), lousy earnings, and a stock price that has gone into orbit. It's one of my favourite shorts.
Sorry for the bearish views, but even Buffet thinks this tulip is nuts. (g)
Best, Earlie |
