Skip to main content

Why two semiconductor companies bucked the downtrend

Wednesday the market sold off in the last hour and major indexes ended the day with losses. Semiconductor indexes were underwater pretty much the entire day. The iShares Semiconductor ETF (IGW) ended down 1.72%.

Two well-known semiconductor companies were able to buck the downtrend and close with gains. Who were they and what were the reasons? Are there clues as to else might benefit?

Buried in the semiconductor supply chain are the companies that actually produce the chips for the firms that do much of the design work and handle sales to end users and OEMs.

The two biggest contract manufacturers of semiconductors are Taiwan Semiconductor Mfg. (TSM) and United Microelectronic Corp. (UMC). The item that gave both these stocks a boost was an article on the DigiTimes web site discussing utilization rates.

The article quoted sources that indicated that both companies have
...seen a surge in demand for networking and wireless solutions. TSMC's 65nm-process capacity has been almost fully utilized, while UMC's average utilization rate at its 8-inch fabs remains at above 90%.
There is now an expectation that this will lead to both companies beating earnings expectations when they report later this month. Investors seem to believe it as TSM gained 2.72% today and UMC gained 0.54%.

Other implications --

Who else could be on track to beat based on this information? Some of the prominent customers mentioned in the article are Qualcomm (QCOM) , Broadcom (BRCM) and Atheros Communications (ATHR).

Tellingly, the article says that many of these chip orders are for short lead times. This suggests that OEM companies may be revising their demand expectations upward. This is good news for the tech sector in general. Maybe consumers, especially the gadget-buyers, are finally getting ready to open their wallets.

The following chart contrasts some of the stocks mentioned above:

Explore more UMC Data on Wikinvest


Disclosure: none

Comments

Popular posts from this blog

Running TradeRadar on Windows 7 and Windows 8

Development of the original TradeRadar Stock Inspector software was begun back in the days before Windows 7 and Windows 8 were available.

As these newer versions of Windows have become more popular, we have heard from some users that they are having problems installing and running TradeRadar on their newer PCs.

The good news is that TradeRadar will work just fine on Windows 7 and Windows 8. All you have to do is adjust the Windows Compatibility Settings to ensure TradeRadar runs as intended.

It is recommended that you can apply Compatibility Settings when running the initial installation; however, it is also possible to apply Compatibility Settings after the program has been installed.

Prior to installation
After downloading the install program, go to the folder where you have stored the TradeRadarStkInsp_7_Setup.exe or TradeRadarStkInsp_7_PRO_Setup.exe executable. Right-click on the executable file and select Properties. Click the Compatibility tab. Adjust the Compatibility mode to …

Unlock Stock Market Profits - Key #1

This is the first in an ongoing series of articles where I discuss what I feel are keys to successful investing. It is based on a post that provides a summary of the ten keys that individual investors should use to identify profitable stock trades. (Click here to read the original post)

There are two basic steps to investing. First, you need to find stocks that seem to have some potential. Then you have to determine whether these stocks are actually good investments. There are many stocks that at first glance look interesting, but further research reveals that there are too many negatives to warrant taking a position.

This first post in the series starts at the beginning: getting good investment ideas.

Key #1: If something special is happening to a stock, it will be reflected in some kind of unusual activity in the markets.

As individual investors, we will never be the first to know; however, unusual activity can be an early sign that allows us to follow the Wall Street professionals and …

Unlock Stock Market Profits - Key #4

This is the fourth article in a series of posts describing 10 tools to help you identify and evaluate good investing ideas. It is based on a post that provides a summary of the ten keys that individual investors should use to identify profitable stock trades. (Click here to read the original post)

With this fourth post, we will continue another step along the path of finding stocks that seem to have some potential. The first post in the series discussed how to use unusual activity to identify investing ideas. The second post described how to use stock screeners. The third post described how to use lists of new highs and new lows. This post will focus on identifying social or business trends in order to find investing ideas.

Information on new trends might turn up anywhere. In conversation with friends or business associates, in newspapers or magazines, on TV or though your work. The key is to be aware of trends and how they start, stop or change. We'll start by describing what to lo…