11–20 of 106 posts
Could be that Intel chip supply shortages, and decreased average sale prices (due to AMD offerings) could be the reason for this. Not as many people upgrading as inter generational gains start to level off.
At least since 2016, I saw notion of a coming crash coming from very esteemed industry publications that cost few thousand bucks to access.
Everybody in semi knows of the cyclical nature of the industry, and the non-stop long bull run since 2008 looked very unusual to many.
Why is this so important?
The reason is that few years ago, the industry committed itself to the biggest capital infusion in history with EUV.
Those fabs costs tenths of billions, and take years to build. They are never ever constructed without an extremely thorough research done with top tier economists.
I wrote before that semiconductor industry economists were awaiting a crash for a very long time. At least since 2016, I saw notion of a coming crash coming from very esteemed industry publications that cost few thousand bucks to access. Everybody in semi knows of the cyclical nature of the industry, and the non-stop long bull run since 2008 looked very unusual to many. Why is this so important? The reason is that fe…
EUV is necessary to keep up with Moore's Law expectations.
Earlier quoted context omitted.
Revenue falling at all in any tech industry is usually cause for extreme concern, as all the investor numbers assume infinite growth.
Perhaps that’s the real problem there. If companies like Intel and AMD are still turning a respectable profit, there’s no cause for actual panic, yet. Investors should learn that intractable P/Es on established companies are, at best, unwise in all but the edge cases.
I wrote before that semiconductor industry economists were awaiting a crash for a very long time. At least since 2016, I saw notion of a coming crash coming from very esteemed industry publications that cost few thousand bucks to access. Everybody in semi knows of the cyclical nature of the industry, and the non-stop long bull run since 2008 looked very unusual to many. Why is this so important? The reason is that fe…
> They are never ever constructed without an extremely thorough research done with top tier economists. EUV is necessary to keep up with Moore's Law expectations.
From one side, there was a long held reservation to poor money waiting for the cycle to restart, but the end of the cycle was not seemed coming despite everybody showing that the conditions for it were there.
This article sounds alarmist. "Revenue fell 12% to $412 billion in 2019, the Semiconductor Industry Association said Monday in a statement. That’s the biggest drop since 2001, when industry sales slumped 32% as the dot-com bubble burst." I don't see how 12% is a skyfall number. Especially when compared to 32%. It was pay-walled so I did not read any further.
Revenue falling at all in any tech industry is usually cause for extreme concern, as all the investor numbers assume infinite growth.
This is absolutely not the case in semis.
Earlier quoted context omitted.
Revenue falling at all in any tech industry is usually cause for extreme concern, as all the investor numbers assume infinite growth.
Perhaps that’s the real problem there. If companies like Intel and AMD are still turning a respectable profit, there’s no cause for actual panic, yet. Investors should learn that intractable P/Es on established companies are, at best, unwise in all but the edge cases.
Cyclical trough/peak earnings normalization is decades old from industrial and resource sectors.
This article sounds alarmist. "Revenue fell 12% to $412 billion in 2019, the Semiconductor Industry Association said Monday in a statement. That’s the biggest drop since 2001, when industry sales slumped 32% as the dot-com bubble burst." I don't see how 12% is a skyfall number. Especially when compared to 32%. It was pay-walled so I did not read any further.
For others who hit the wall. https://outline.com/VYJEa5
This article sounds alarmist. "Revenue fell 12% to $412 billion in 2019, the Semiconductor Industry Association said Monday in a statement. That’s the biggest drop since 2001, when industry sales slumped 32% as the dot-com bubble burst." I don't see how 12% is a skyfall number. Especially when compared to 32%. It was pay-walled so I did not read any further.
The environment in which that 32% drop happened involved thousands of companies failing within a short time span. I personally ended up leaving the Bay Area after being out of work for over a year. (I came back.) Just to offer some context to hang those numbers on.
Agreed, this news doesn't square with market performance. For instance, FSELX (Fidelity Select Semiconductors portfolio) mutual fund is up 43% over one year, doubling the performance of the S&P500. Top-10 holdings (68%) include Intel, Qualcomm, Broadcom, Nvidia, Micron, Marvell, ON, NXP, FLex, Commscope, so it's a fairly broad measure. For this cross-section to be performing so strongly, others must be circling the d…
First, people are buying equities in general because interest rates are being held low artificially by the Fed, which has been pressured by the President to do this.
Second, few traders and investors understand how to differentiate semiconductor companies, so when it blows, it will all blow. People get out of crowded trades chaotically. Investors and traders, who are largely unsophisticated about the specific technologies that each company develops and markets, will punish the sector rather than choosing individual names to sell. I will say it again: most people who trade tech professionally have no fucking clue what these companies actually build. They look at numbers, watch earnings reports, and listen to buzzword-laden commentary from research analysts.
Look at Apple. Their supply chain is threatened by factory shutdowns and a huge market of theirs has basically been put on ice, but their stock is near all-time highs. They haven't made a game-changing product since the days of Steve Jobs, and people usually say their value now comes from their execution. But how can you execute if your suppliers are shut down and one of your major markets is closed for business?
INTC is facing tons of pressure in enterprise and PC from AMD, their 10nm has been a disaster for them, and yet their stock popped 9% on earnings due to cloud demand. It's trading near dot-com bubble levels. They are getting hurt in their competition vs TSMC on fab, and losing market share to AMD, yet their stock is like a rocket ship. Doesn't this seem weird?
QCOM has been hit hard by several regulators and in a number of lawsuits for its IP bullying, it has come out and said that coronavirus is going to hurt smartphone manufacturing and sales, and yet its stock is trading near all-time highs.
Don't ever confuse stock performance with company performance. Boeing stock is trading at more than double where it was when the 737 Max 8 took its first flight four years ago.