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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: IQBAL LATIF who wrote (40116)	7/2/2001 2:56:04 PM
From: IQBAL LATIF	Read Replies (1) \| Respond to of 50167

Good construction and the bad Semis, the market response in rising SOX is indicative of seeing the light at the end of the tunnel...Construction completions rose 0.3% in May from the previous month. A broad-based decline in commercial and industrial completions was offset by continued strength of residential and public construction. Building activity remains a growth leader in the economy, primarily due to high demand for housing. Global chip sales fell 7.3% in May from the previous month, 5.9% after adjusting for the usual seasonal variations. All four of the SIA’s regional groups experienced declining sales, with the Americas market recording the largest fall, at 7.8%, and the Asia-Pacific market the smallest, at 4.5%. The weakness in IT spending has spread from the U.S. to other markets, exacerbating excess inventory holdings worldwide. Semiconductor sales fell in May by 7.8%, partly seasonally induced. On a seasonally adjusted basis, the sequential decline was 5.9% -- the ninth consecutive falloff. For the third month in the current cycle, sales were down on a year-over-year basis, by 20.1%. The Americas market had the most severe decline in May, but the other three regions also registered sharp fall-offs. Both global and U.S. finished equipment inventories are coming more in balance with demand, although primarily due to a sharp reduction in production. A substantial improvement in chip inventories is still lagging. Behind the Numbers The ninth-month downturn is driven by both a slowdown in U.S. IT demand growth and weaker prices for more common chip types. Weak IT demand has spread to Europe and Asia, while Japan is in or near recession. Over the past three months, markets in the Americas and Asia, excluding Japan, have been the weakest. The steep slide in the Asian region was related to its reliance on memory chip manufacturing, which has experienced the largest deterioration in price trends. The slowdown in U.S. computer demand growth heavily impacts chip demand in Asia as well, since many PCs slated for the U.S. market are assembled in Asia. The advance release of shipments, inventories and orders for U.S. manufacturers last week showed renewed weakness for computer and communications equipment orders. The decline in computer equipment can be explained by price cuts, initiated in tandem with reduced components costs. The 12% decline in communications equipment indicates a deepening in the contraction of the telecom equipment industry. There is little hope of a turnaround given the excess capacity present in telecom services. The jump in semiconductor orders made up approximately half of the April decline. Shipments continued downward, and the book-to-bill remains below one. Inventories did not fall as much as shipments, so the I/S ratio continued downward. Despite anecdotal reports of improved supply-demand conditions from chipmakers, further price deterioration is likely.