Bill thanks for correctly spelling utili-z-ation! Your info on this issue is correct. There are periods of scheduled downtime for maintenance of fab tools.
Here is some info from the people who are paid to follow semi's:
Some Chip Analysts Upbeat Despite Intel, Micron Dngrades
By KAJA WHITEHOUSE Of DOW JONES NEWSWIRES
NEW YORK -- Growing concern over the health of the personal computer market has driven chip-stock investors away from the sector for fear of contagion.
Two prominent semiconductor companies have been hit this week by analyst downgrades, and the whole sector has been bleeding as a result.
On Tuesday, U.S. Bancorp Piper Jaffray analyst Ashok Kumar cut his rating on Intel Corp. (INTC) to buy from strong buy. He warned that weakness in PC demand could result in unit growth "well below consensus expectations."
Then Wednesday, Donaldson Lufkin & Jenrette Securities Corp. analyst Boris Petersik lowered his rating on Micron Technologies Inc. (MU) to underperform from buy, citing a drop in spot prices for dynamic random access memory, or DRAM.
The rating cuts pushed down shares of Intel, Micron, and many competitors, but not all analysts feel the warnings were warranted.
In fact, several analysts have disputed assertions that the sector is weak, saying it's too early to judge.
What makes them so optimistic? Historical trends, they say.
Dan Scovel, analyst at Needham & Co., said it's too early to know whether the current lull in the PC market isn't just "normal seasonality."
Scovel said PC sales are generally slower in the second and third quarters but usually begin to pick up by mid-August. While he agrees the anticipated ramp-up hasn't been as strong as expected, he thinks it's too soon to make predictions.
"There appears to be a lull, but it's far too early to claim that there's any problem," especially considering that this quarter is typically back-end-loaded, he said.
Lucas Ward of Chase H&Q agreed, saying PC sales are normally slow in July and August, and that his manufacturer sources tell him production has been picking up.
In fact, Ward says those on the sell-side have no evidence to support claims of slowing demand.
Those who say PC sales are slowing have "no good data points" to work with, he said. Although Bancorp Piper Jaffray's Kumar warned demand is weak, "people from the industry suggest processors have been in shortage and so they've held back shipments," Ward said.
Another analyst, who didn't want to be named, also shrugged off slower PC sales as due to seasonality, saying "there's still another month to go."
With so many analysts willing to wait for what they hope to be better times, why the sell-off?
"Investors are kind of spooked," and have been for a long time, said Scovel, adding that while he's confident industry conditions are strong, he is "less confident about Wall Street sentiment."
Ward echoed that thought, saying he thinks investor confidence is down. While investors bought into semiconductor stocks through August at a time when sales were slow, they're suddenly bearish, because "the flavor of the day is to be bearish," he said. "But it's not really based on any clear data," he added.
And perhaps that is the problem: a lack of clear data.
Most investors and analysts track industry strength in terms of unit growth, but estimates vary greatly, ranging from 12% to 20% annual growth.
Scovel said he estimates unit growth of about 15% a year, but said several investors are looking at something closer to 20%, he said. In addition, he thinks revising the estimate isn't the answer, but that investors will have to adjust their "bias for future expectations" instead.
Hans Mosesmann, analyst at Prudential Securities Inc., said there are so many factors contributing to analyst views that "everybody's looking at something different, and anybody can be right." Mosesmann said he is bullish on the sector and thinks investors are just nervous about the downpour of negative opinion.
"Nobody even knows how many PCs are sold in the world," said Ward, who estimates most PC analysts are looking at unit growth as low as 12% a year.
WSJI, Jim |
