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Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: TigerPaw who wrote (10585)	12/18/2002 10:25:43 AM
From: stockman_scott	Read Replies (1) \| Respond to of 89467

Still Bullish on Chip Stocks By Thomas Kurlak Special to RealMoney.com Wednesday December 18, 8:13 am ET I'm continuing to buy stocks in the semiconductor sector and to add to my earlier purchases of Intel (NasdaqNM:INTC - News), Applied Materials (NasdaqNM:AMAT - News), National Semiconductor (NYSE:NSM - News) and Nokia (NYSE:NOK - News). Recently, I bought Kulicke & Soffa (NasdaqNM:KLIC - News), a small but industry-leading semiconductor production equipment company. For the chip sector overall, I'm watching for reports of longer order lead times. With inventories low and unit demand up, it's just a matter of time before chip availability becomes tighter. When that happens, as it always does each cycle, orders will automatically increase to build inventory, and prices will firm. End demand for chips always grows as new markets replace old ones and inventory cycles ebb and flow. Consumer electronics is hot and appears to be the next big market for semiconductors. Flat-screen TVs, portable DVD players, wireless audio, color cellular Web phones, wireless networking and automotive electronics such as global positioning offer the opportunity, like PCs, of very large-unit markets. Meanwhile, PCs are picking up. The reason is that the average installed PC is probably no more than 450, MHz and the average PC in stores today is about 1.2 GHz, with three times the memory. A replacement cycle is overdue. I expect the mildly better-than-expected semiconductor sales levels of the fourth quarter to continue in the first quarter. So far, I've heard Intel, Advanced Micro Devices (NYSE:AMD - News) and Xilinx (NasdaqNM:XLNX - News) raise fourth-quarter sales expectations. In the first quarter, I'm looking for distributors to indicate that their level of turns business (orders booked for immediate delivery), as a percentage of total orders, is up. This will indicate that customers are running low on chips and need quicker delivery than the factories can provide. For quicker delivery, they're willing to pay the distributor price premium. Longer lead times and higher turns orders -- these two trends are my next signposts, and they'll be key to the semiconductor stocks in 2003.