Advertise | Bookmark | Contact Us | E-Mail List |  | Update Page | UraniumSeek.com 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

What History Says for Gold Stocks in 2018-2019
By: Jordan Roy-Byrne CMT, MFTA

Jack Chan's Weekly Precious Metals Market Update
By: Jack Chan

Synchronized Global Growth May Have Arrived
By: Frank Holmes

Asian Metals Market Update: November-21-2017
By: Chintan Karnani, Insignia Consultants

Gold Seeker Closing Report: Gold and Silver Give Back Friday’s Gains
By: Chris Mullen, Gold Seeker Report

Operation Twist By Another Name and Method?
By: Gary Tanashian

SWOT Analysis: Gold Bounced Back After Attempts to Knock Down Price
By: Frank Holmes

Hyperinflation in Zimbabwe – It’s back, but maybe not for long
By: JP Koning

Gold Versus Bitcoin: The Pro-Gold Argument Takes Shape
By: John Rubino

Inflation and Counterfeit Credit
By: Keith Weiner

 
Search

GoldSeek Web

 
Semiconductor Sector, Updated


 -- Published: Tuesday, 30 August 2016 | Print  | Disqus 

By Gary Tanashian

We have been using the Semis as a one of several economic signposts, and as an investment/trading destination since the Semi Equipment ‘bookings’ category in the Book-to-Bill ratio began to ramp up several months ago.  But those who say that Semiconductors are subject to pricing pressures are correct.  It is a segment in which people need to be discrete with their investments.  NFTRH 410 updated some details about this market leader.

sox vs. ndx

sox vs. spx

Semiconductor Sector

Semi has been a leader for our overall market and economic view, which has been bullish since noting that a trend of three straight months of increased bookings was established in April. The Book-to-Bill for July came in strong once again, with a new high in the key ‘bookings’ category.

semi book to bill

From SEMI: “Monthly bookings have exceeded $1.7 billion for the past three months with monthly billings trending in a similar manner,” said Denny McGuirk, president and CEO of SEMI. “Recent earnings announcements have indicated that strong purchasing activity by China and 3D NAND producers will continue in the near-term.”

China? That does not sound like a long-term, stable fundamental underpinning. This Semi ramp up may be relatively selective (aside from Chinese demand, which could cut out at any time, it would pay to focus on 3D NAND).

From Market Realist: “Applied Materials’ (AMAT) strong guidance for fiscal 4Q16 reflects the overall semiconductor industry’s health. AMAT revised its forecast for 2016 WFE (wafer fab equipment) spending from flat to single-digit growth. The slight growth would be driven by a 40% YoY (year-over-year) increase in 3D NAND spending and a 5%–10% YoY increase in foundry spending. However, this growth would be partially offset by a 25% YoY decline in DRAM (dynamic random access memory) spending and a slight decline in logic spending. In 2016, AMAT is witnessing a broader mix of foundry customers from different geographies, especially China.”

semiconductor equipment

Also from SEMI, in a mid-year update: “While many are forecasting low-single digit unit growth for semiconductor devices, average selling price (ASP) trends will drag down the overall revenue outlook for the industry.”

This is important because I agree that the Semiconductor manufacturers are a crap shoot, as many of their products are in essence, commodities, in that they are in a highly competitive industry and readily available. The Equipment and Materials sectors service the whole of the sphere with specialized equipment and materials.

“One bright spot are semiconductor equipment bookings that are showing a 6 percent year-over-year increase (see figure below). The strength in bookings is boding well for a stronger second half of the year and is supported by 2016 capex plans by Intel, Samsung and TSMC as detailed by IC Insights’ recently released bulletin.

Other segments are showing positive momentum. First quarter silicon volume shipments, as well as equipment bookings and billings were higher than the fourth quarter of last year. Quarterly increases continued into the second quarter for equipment bookings and billings, silicon wafer volumes, and leadframes. The World Semiconductor Trade Statistics showed that device shipments increased 5 percent, resulting in a 1 percent increase in chip revenues in the second quarter when compared to the first quarter. Based on past data trends gains are expected to continue into the third quarter as the third quarter, on average, is the strongest quarter for semiconductors.

The lingering question is, “will the gains in the second quarter and anticipated gains in the third be enough to offset the typically slow fourth quarter?” The answer is, “it depends.” From a device perspective it does not appear it will, as evidenced by the current mid-year outlooks depicted above [graph omitted]. However, from an equipment and materials point of view the future is more promising. SEMI is expecting the semiconductor equipment market to increase a nominal 1 percent this year, while the materials market will increase just under 2 percent, which would put the equipment and materials markets at $36.9 billion and $44.1 billion, respectively.”

How does this affect our view? As a leading economic indicator I’d say that the Equipment and Materials ramp up remains a positive, although we should tamp down any enthusiasm that a grand new economic era may be upon us and continue to cross reference other indicators like PALL-Gold, Commodities vs. Gold, etc. for cyclical indications. As a view on direct investment or trading in the Semi sector, I’d say we’d need to be very discrete. Quality, leading equipment companies like AMAT and LRCX and Materials companies like CCMP are the focus.

This chart shows the bullish state of 2 Equipment companies, the constructive state of another, and one still bullish Materials company. We’ll look at others going forward if/as the situation remains constructive.

lrcx amat klic ccmp

NFTRH.com and Biiwii.com


| Digg This Article
 -- Published: Tuesday, 30 August 2016 | E-Mail  | Print  | Source: GoldSeek.com

comments powered by Disqus



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2017



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer

The views contained here may not represent the views of GoldSeek.com, its affiliates or advertisers. GoldSeek.com makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, is strictly prohibited. In no event shall GoldSeek.com or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.