Skip to main content

Semiconductor sector still solid - headlines from the frontlines

Semiconductor ETFs have been on the rebound lately. Here’s a roundup of semiconductor news from the Digitimes web site that illustrates what’s going on in the sector.


12-inch wafer prices to rise 10-20% in 2Q10

Demand is sufficient to allow suppliers to foundries to raise their prices. The article goes on to say that TSMC and UMC have both seen full utilization rates at their 12-inch fabs, thanks to orders for FPGA, GPU, network and wireless applications, according to the sources. Suppliers have kept capacity at recession levels while ramping prices. Pricing power is a good indicator of growth in demand so, from that point of view, this can be considered a positive.



Supply chain remains tight amid conservative capacity management, says iSuppli

"As iSuppli has been reporting for several months, the recovering economy has brought renewed demand. However, component suppliers have yet to jump in with both feet when it comes to ramping up capacity," These companies are just enjoying increasing margins and enjoying a little pricing power for the first time in a couple of years.


Chip-gear book-to-bill almost flat in February 2010

OK, the sequential month-over-month numbers are flat and the lack of improvement is disappointing. But when looking at the book-to-bill ratio from a year-over-year perspective, the improvement is dramatic.And this is from a sector that has been  really devastated. When chip demand cratered, equipment sales went down the toilet. The fact that chip manufacturers are finally buying equipment to increase productivity and capacity is a good sign of confidence in future prospects for chip sales.


Intel sees chipset demand from motherboard makers exceed CPU shipments by 20%, say sources

Motherboard clients of Intel have been increasing orders for chipsets recently, causing chipset shipments to rise to a level 20% higher than processor shipments. This implies PC sales are still on the rise, probably partially due to the Windows 7 upgrade cycle.


Chip industry to grow 7% in 2011, predicts TSMC chairman

The global semiconductor industry will grow by 7% in 2011, and is poised to post a CAGR (compound annual growth rate) of 4.2% during the period from 2011-2014, according to Morris Chang, chairman of Taiwan Semiconductor Manufacturing Company (TSMC), speaking at the recent Global Semiconductor Alliance (GSA) summit.

Considering how the sector was in free-fall a year or so ago, this shows that growth is not a flash in the pan. These expectations for steady improvement contradict calls for a double-dip


DRAM spot prices keep rising

Spot prices for mainstream 1Gb DDR2 and same-density DDR3 have recently rallied to approach the US$3 mark, reflecting demand is outstripping supply.

This is yet another indication that demand for chips is robust and even the usually over-supplied and lowly memory chip is allowing memory makers to raise prices for the first time in ages.


How to play it –-

I always look to the ETFs in a situation where there seems to be something positive going on across the whole sector. Here are a few for your consideration:
  • IGW, the Semiconductor iShares S&P/GSTI Index Fund
  • XSD, the SPDR S&P Semiconductor Index ETF
  • SMH, Semiconductor Holders
  • PSI, PowerShares Dynamic Semiconductors Portfolio
  • USD, ProShares Ultra Semiconductor ETF

    Disclosure: modest position in USD

    Comments

    Popular posts from this blog

    Brazil - in a bubble or on a roll?

    A couple of years ago, no one recognized the real estate bubble even though it was under everyone's nose. Now, analysts and bloggers are seeing bubbles everywhere they look. One of them, they say is in Brazil whose Bovespa stock market index has doubled in the last 12 months. Does the bubble accusation hold water? I don't think so and here are 7 reasons why Brazil is by no means a bubble economy: Exports have held up over the past year thanks to demand from China for Brazil's soya exports and iron ore. This was helped by the the Brazilian government's drive to improve trade links with Asia and Africa. Export diversification, spurred by a more active trade policy and increased focus on "south-south" trade under current president Lula, helped mitigate the decline in demand from OECD (Organization for Economic Co-operation and Development) countries A "sensible" economic framework has been in place since the 1990's. This has included inflation ...

    Trade Radar gets another update

    Some of our data sources changed again and it impacted our ability to load fundamental/financial data. In response, we are rolling out a new version of the software: 7.1.24 The data sourcing issues are fixed and some dead links in the Chart menu were removed. So whether you are a registered user or someone engaged in the free trial, head over to our update page and download the latest version. The update page is here:   https://tradingstockalerts.com/software/downloadpatch Contact us if you have questions or identify any new issues.

    Time to be conservative with your 401K

    Most of the posts I and other financial bloggers write are typically focused on individual stocks or ETFs and managing active portfolios. For those folks who are more conservative investors, those whose main investment vehicle is a 401K, for example, the techniques for portfolio management might be a little different. The news of stock markets falling and pundits predicting recession is disconcerting to professional investors as well as to those of us who are watching our balances in an IRA or 401K sag. What approach should the average 401K investor take? Let's assume that the investor is contributing on a regular basis to one of these retirement accounts. There are two questions that the investor needs to ask: 1. Should I stop putting the regular contribution into stocks? My feeling is that investors making regular contributions are being handed a present by the markets. Every week the market goes down, these investors are lowering their average cost. When markets reco...