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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: jeffbas who wrote (2679)	12/6/1997 6:08:00 AM
From: Stewart Whitman	Read Replies (2) \| Respond to of 78594

Jeffrey, One of the best places for information about the semiconductor industries is the EETimes (http://www.eetimes.com). I saw their estimate for CAGR of 18.6% (1996 through 2002) in the following article: techweb.com which seems to be reasonable. I'm generally a bottom-up investor and look more at specific companies. I understand that you see more integrated chips, decreasing costs, etc. But don't forget that there's going to be a real increase in complexity of devices and there are going to be changes in consumer demand. I bought a $200 1200baud modem in 1985 - it now sells for maybe $1 - but a 56K modem costs about $100 too, and more people bought the 56K's than the 1200 baud. Also, the semiconductor industry is larger that the PC. If PCs slow, there'll be an interactive set-top box, or a collision detector for your car, or a wristwatch with the built-in telephone, or something else. I like DSPs (hey, I even programmed DSP's a few years ago). But I don't see a real way to invest directly in DSP. In consumer electronics, standalone, general-purpose DSPs are becoming less common. More often, they're included as a core in an specialized IC (for example, you modem probably contains a DSP). The people who design the core get some royalties/fee but most likely these people are Texas Instruments, Motorola, or Analog Devices. Big companies, so there is no real pure play. There have been some niche players in the DSP core business, but with the competition from the big companies, I don't see anything compelling. As far as ARW and AVT, I can only guess. These companies are quite diversified in terms of what, where, and to whom they sell. So they can probably weather minor down turns in any individual areas quite well. Also, as long as they can signup enough new suppliers, they can continue to grow the business. Look at ARW for the past 6 years - profit margins fixed at 2%-3%, its the top line that provides all the growth. I suspect that they actually might benefit somewhat from a drop in the prices of parts that they import from Southeast Asia (I suspect that these companies would be net importers from SE Asia). AVT also set a stock buyback. Stew