Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Meathead who wrote (25016)	12/13/1997 12:43:00 PM
From: Venkie	Respond to of 176387

Barrons positive on Chip Sector Here is the relevant portion of the article from Barrons of the Monday Dec 15. Can the outlook be as grim as all that? To get a fresh reading, we checked in with Moshe Handelsman, president of Advanced Forecasting, a Cupertino, California, firm with a remarkable record of predicting major turns in chip demand. Every month, Handelsman updates a proprietary econometric model of the chip and equipment industries, using a set of 30 economic indicators. Handelsman, who's been operating his forecasting service for a decade, sells his research to chip manufacturers, equipment companies, distributors, investors and others with a keen interest in the status of integrated circuit demand. Handelsman's outlook for 1998 remains the same: healthy sales growth for both chips and equipment. The situation, Handelsman cautions, is complicated. Korea, he notes, has structural problems and can't afford to build new chip plants. He wonders if the country might face the same problem Japan did in 1991 and 1992, when it slowed spending on new equipment and then lost considerable market share. He notes that many of Korea's chip producers are buried inside large, troubled conglomerates, which could slow spending across the board, without regard for the long-term consequences. On the other hand, Handelsman notes, Korea accounted for less than 9% of total semiconductor equipment sales in the first nine months of 1997. "If spending drops to half of the current level, or even just a third, there will be an impact on equipment sales, but it won't be huge," he comments. "And if unit demand for chips remains strong, someone else could increase capacity and make up some of the difference." At the moment, Handelsman points out, there's alarming overcapacity in the DRAM market, pushing prices lower at frightening speed. He figures that few, if any, companies are now making a profit on 16 MB memories. Some, he says, have reacted by shifting capacity away from memories to other parts, spreading the pain to other segments of the industry. So for the DRAM market, he observes, a slowdown in spending by the Koreans could be a blessing. Handelsman figures that DRAM pricing next year should return to more normalized behavior, dropping at a 30% annualized rate, rather than the much faster declines suffered in recent months. Handelsman's model typically calls turns in the semiconductor market three months before they happen. At the moment, he contends, there are no signs of a semiconductor recession ahead. Depending on how pricing trends fall out, he says, chip industry revenues next year should grow 15%-25% a year. Equipment industry sales, he adds, will rise 15%-20%. If he's right, the stocks are raging bargains.