Friday, September 06, 2019

Migrant Worker - Periodic Tech Report

Some of you have seen this already - on the Skype feed or splattered throughout my random e-mails. Forgive me for the duplication if you are one of those folks.

Yes, this needs more work but even in this early form it is relevant so I thought it was worth a share. Lately I have been blabbing a lot about the wideband gap semi market(s) and the potential ahead. Some evenings, before I go to bed, my brain starts randomly churning the math that is driving this market. I never really get to the conclusion. Time to build and ramp wafer production line (including reactor), time to design and qualify device, time to make boule, time to prepare wafer, time to process wafer, test time, package time... final sale time - whch depends on customer. On and on and on....

All this number crunching/grinding to arrive at something so basic - # of wafers needed to produce X number of useable devices for X number of use cases. That's oversimplifying things because there are more X's in the actual exercise.... Those that are in this market must be seeing something because they are talking about 30x capacity growth over the next five years.

Sometime, perhaps in the coming days, I'll share a bit of my ciphering with you. Right now it's still a work in progress.

In the meantime, here are a few items worth noting:

ST Microelectronics (STM) made some brief comments about SIC (silicon carbide) at Citi's Technology Conference (so far, I do not see a transcript - but it will probably get posted). Here's a link to the audio:
https://www.veracast.com/webcasts/citigroup/technology2019/94104448689.cfm?0.682913506864

First, I want to say it's hard (at least for me) to understand,. My ear for the French accent is not that great and he is speaking in English!

So you don't have to listen to it all, allow me to put it in a nutshell.... (the SIC part starts @ around the 26 min mark):

For STM the key customer, right now, is Tesla (TSLA) -- " $100m last year to $200m this year. The longer term goal - (this has to be total marketshare?) is $1 billion by 2025 out of a total market of $3 billion. (If this is total market for SiC devices I think this low, way low - but, what do I know?)

Many of you know how I feel about Tesla - the situation is tenuous. That said, the overall five year and and even longer trend away from ICE (internal combustion engines) is clear. I admit that Tesla kicked this all off - no doubt about that. Whether or not they remain the ultimate winner or remain the biggest buyer of SiC components remains to be seen. I have my doubts.

For the moment the growth in STM's SiC business is mostly Tesla but they are now in production with SiC MOSFETs and diodes for 9 customers. Today 33 projects are ordered which will start in production in the next 3 years (18 automotive, 15 industrial).

STM expects to complete the acquisition of Norstel (SiC wafer maker) this year. They are planning to start internal SiC wafer production in 2021. Side note, which you might probably be aware of - STM has a wafer agreement with CREE (who doesn't?)....

STM was supply constrained last year and couldnt even sample to the industrial market. That has loosened up and industrial has a "big appetite" for SiC.

There might be more - will go over again.

*.*

I also went through a few other Citi Tech transcripts this AM - Intel (INTC), Applied Materials (AMAT) to name but two.... These two, along with many others, are saying (hoping?) that the industry is bouncing along a bottom and the future is starting to look more promising. This, of course, is a good thing but it needs to be understood that saying it is happening and it actually happening are two different things. Keep in mind that projecting optimism is part of the nature of the technology beast.

I must admit that I am a bit more optimistic about the future but I question whether or not I can time the turn. Personally, I think it's early and lean toward the idea that it really starts in the middle/latter part of the 2nd quarter next year - 5G rollout in higher gear for sure - memory market, perhaps, bottomed out, semi equipment, maybe a bit longer to recover, but no longer crashing lower.

Calling a bottom at this juncture is, to me, speculation - caveat emptor.

Speaking of bottom callers - Microchip (MCHP), another player in the SiC device market, reaffirmed their "slightly up" guidance for this quarter. I can't recall the last time they did this - the annoucement did not really say much other than they reaffirmed what they originally said. Reassuring.... hmm.... Some of this pickup has to be seasonal. Whether or not it turns into a resilient bottom remains to be seen.

Applied Materials (semi-equipment) pretty much said things were stabilizing during their Citi presentation. No mention of SiC but I need to go through that one again. Applied does talk about SiC on their website: http://blog.appliedmaterials.com/silicon-carbide-superhero-silicon Notable... yes, indeed. Just the fact that they are mentioning if is significant because small markets cannot - no matter how fast they are growing - cannot move the needle at Applied.

INTC said that this year's slowdown in Datacenter spend - which is really not a surprise if you realize that '18 Data Center spend was pretty big - is bottoming. Enterprise is still weak. There does appear to be some life in the PC market - that's probably due to MSFT ending support for Win7 in January. An actual upgrade cycle? Who'd a thunk?

What I found notable - and this has been said many times - is what Intel is saying. This is my take - see the picture, slice the picture up into puzzle pieces, build puzzle pieces and fit together to reconstruct picture. Okay, that is a weak analogy, I know.

We are in the 3rd wave of the internet/connected tech era. First was PC/Internet. Second was mobile/smartphone/Internet. Today it is IoE or IoT or whatever acronym you choose. From sensor input to and through network to compute analysis (AI is the thing today) and back to network to sensor to useable output.

Yes, there is stuff I didn't put in but I am sure you get the drift. I mean, you can even get into the mintuae of this - the transistor level if you want to get really detailed. Such are systems.

The 3rd Wave - Steve Case is responsible for this moniker. Not that it matters but I tagged it as the Sensorization Wave.

i actually wrote about this about 10 years ago. My essay/babble referenced changes that happened in the ITRS (International Technology Roadmap for Semiconductors) - the roadmap became focused on "systems" vs. process tech. This is nothing special but I remember it vividly. Sadly, but par for the course, I received no plaque, noteriety/visibilty or even the slightest hint of recognition. Even though I am probably the only one that remembers this I still like to pat myself on the back for it. Shameless... I know...

Everybody needs a least one Fan.

*.*

The linked article (see below) references a KeySight (KEYS) chart showing the application map for GaN and SiC - it makes sense.... Although, i think things are going to move faster than they expect. Of course, I could be wrong here and the world could end tomorrow - all bets are off if that happens.

KeySight, as you might be aware, is the test and measurement spinout from Hewlett Packard - once known as Agilent. Followers and I - yes,I have a couple - were discussing the outlook for KEYS this past week. KEYS has been on a tear and that will likely continue given their presence/exposure to expanding networks and 5G. More on this on another day.

Anyway, scroll down this page to the second image for the KEYS application map:
:
https://www.ttii.com/content/ttii/en/marketeye/articles/ca)tegories/passives/me-slovick-20150422.html

Interesting factoid: TTI is a wholly owned subsidiary of Berkshire Hathaway.

Was looking for an article about systems I thought I published on Forbes moons ago - wasn't there but I did find this one and it still cracks meup: https://www.forbes.com/sites/carljohnson/2011/06/01/beware-cell-phones-coffee-pickled-vegetables/

Good grief the Forbes website is a nightmare. It's as if the web developer woke up one day and decided that it would be a good idea to slam the webpage visitor with every available tracking cookie, widget, popup e-mail solicitation and ad module. Unreal...

^.^

I only have $0.02 today but I am sharing it. Dont spend it all in one place.

Feel free to visit the Sponsor page if you would like to Support the Mission. Your Support is welcome and appreciated!

Friday, February 08, 2019

Launch

Launching....

Today there are updates to two pages on this site:

The About page tells you a bit of a story.

The page called "Sponsorship Drive" is brand new.

Yes, I am starting the publishing business again. The About page provides some context.

So, have a gander, feel free to join or, if you have questions, drop me a note: infras@gmail.com

Saturday, March 11, 2017

My Watch List

This is a pretty fair representation of the publicly traded U.S. tech companies I follow on a regular basis.  The point here is to develop a reasonable representation of the electronics food chain - starting with the materials and moving through design tools, fabless designers, subsystems for manufacturing equipment, front end manufacturing equipment, integrated device manufacturers, foundries, back end manufacturing equipment, final assembly and test, printed circuit board manufacturing, subcontract manufacturing, distribution and final sale. That's not quite the end but it's close. There are important additions to any computing/network framework - like connectivity and software

I know, I've skipped some things but if you can piece this together you can probably get a pretty good feel for what is happening to the overall market for electronic products. Hopefully doing such a thing will keep you on the right side of any investment opportunities.

Revisions (additions and corrections), commentary about the overall health of the electronics food chain and the companies on this list will be written over the coming days.  For now, this list is going to be fixed on the front page of this site so readers can monitor any changes.

If you are interested in hearing more detailed thoughts please join the INFRASTRUCTURE subscriber mailing list.  Particulars can be found here:  http://www.infras.com/p/faq.html

Watchlist Update 3/11/17



Specialty Material Suppliers



Electronic Design Automation


Subsystem Component Suppliers



Cognex - CGNX
Coherent - COHR
Entegris - ENTG


Front End Semiconductor Capital Equipment


Aixtron - AIXG
Applied Materials - AMAT
ASML - ASML
Axcelis - ACLS
CVD Equipment - CVDE
KLA-Tencor - KLAC
Lam Research - LRCX
Nanometrics - NANO
Nova Measuring Instruments - NVMI
Orbotech Ltd. - ORBK
Rudolph Technologies - RTEC
Tokyo Electron - TOELY
Veeco Instruments - VECO

Back End Semiconductor Capital Equipment


Aehr Test - AEHR
Cohu - COHU
Electro Scientific Industries - ESIO
FormFactor - FORM
inTest - INTT
Kulicke & Soffa - KLIC
Teradyne - TER
Tessera - TSRA (soon to become part of Xperi)
Xcera - XCRA

Integrated Device Manufacturers


Analog Devices - ADI
Broadcomm - AVGO
Cirrus Logic - CRUS
Cypress Semiconductor - CY
Diodes Inc. - DIOD
Integrated Device Technology - IDTI
Intel - INTC
IXYS Corp. - IXYS
MACOM Technology Solutions - MTSI
Maxim Integrated Products - MXIM
Microchip - MCHP
Micron - MU
Microsemi - MSCC
Monolithic Power Systems - MPWR
Neophotonics - NPTN
NXP Semiconductors - NXPI
On Semiconductor - ON
Power Integrations -POWI
Qorvo - QRVO
Semtech - SMTC
Sensata Technologies - ST
Silicon Laboratories - SLAB
Skyworks - SWKS
STMicroelectronics - STM
Texas Instruments - TXN

Semiconductor Foundry


SMIC -SMI
Taiwan Semiconductor - TSM
Tower Semiconductor - TSEM
United Microelectronics - UMC


Fabless Semiconductor Companies


Advanced Micro Devices - AMD
Qualcomm - QCOM
Rambus - RMBS
Silicon Motion - SIMO
Sigma Designs - SIGM


Outsourced Semiconductor Assembly and Test (OSAT)


Advanced Semiconductor Engineering - ASX
Amkor - AMKR
Silicon Precision - SPIL


Miscellaneous - (still to be categorized)



Microsoft - MSFT

Monday, June 06, 2016

Random Notes on a Monday

Linkfest with just a few comments: 

Okay, this is worth ~5 minutes of your time because it has the potential to be very disruptive.   


They really asked him a question about Donald Trump?  WTH??

If you don't want to watch a video this is worth a read:  


I have a lot of homework to do on this one.

*.*

VR headsets are all over the place but even at $150 or less I am simply not moved to buy one. Now, a contact lens that delivers information (voice, video, you name it), record what you are looking at and anticipates what you are thinking?  A million other little features could be incorporated but when we are talking about an advance this makes total sense. Plunk your Virtual Assistant(s) right in to your eye: 


This is going to take time to come to the market and I’m only noting it because this weekend my son and I were watching a Hero in a video-game-like movie, endowed with an amazing contact lens that pretty much told him everything. save the world and the life of the US President.  

Yes, over the last two days I have seen a vision of the future!  (pun intended)

*.*

Last week the SIA released chip sales for the month of April.  Slow economic growth = slow, or lower, chip sales. Others have commented about this but in the big picture we know that because of really slow global economic growth chip sales could be up or down 5% this year. Right now production is ramping and the industry is coming out of pretty large hole. EPS estimates are ticking up as quarterly confessionals pointed to a build/ramp taking place at the largest smartphone maker in the US.  Do I have to tell you who it is?  No.

Earlier this year I thought that the industry would turn around sooner but the innovation side, coupled with a gentle phase of austerity, has put end demand on hold. I don’t believe consumers have abandoned tech upgrades. They will buy if there is a compelling reason. Right now, I don’t see any reason to rush out and buy today’s offerings. (If you need it, yes. If what you have is working then more than likely you are better off waiting.  JMO)
    
As for the stocks, my favorites continue to be the analog houses and some of the RF suppliers.  Drop a comment here or send a note to carl at infras dot com if you are interested in learning more.  

*.*

Last week the SID Conference was held in San Francisco. This conference follows solid news of a ramp in OLED production and, at least to me, some signs of a product refresh for those companies that want to grab a share of your eyeball. A fairly decent overview of things presented at SID can be found here:  


Last Friday the Korea Herald did a tour of LG’s A3 factory in Gumi City, North Gyeongsang Province. LG believes OLED is the way of the future so they showed the visitors. flexible, rollable, large displays:   


The last display conference I went to was held by the USDC (US Display Consortium). Advances in display technology have been noted in numerous presentations I have seen since that time but the overall pace of advancement has been hamstrung by a lack of standards and challenges in material science. I mean, back with the USDC was doing conferences in the late 90’s and early ’00’s there were showings of flexible, OALED and AMOLED devices. Quantum Dots were even talked about at the time!  There were interactive screens and projectors that could produce wonderful images from small form factors. 

Yes, it was all there but simply not ready to hit the street.

Now it is coming to a device near you.  (This is, perhaps, my most overused phrase)  

Oh!  And if this ramp is going to take a while to play out Applied Materials should really benefit.  Right now the ball is in their court.

*.*

Amidst all the worry about sales of the coming iPhone the Monday Note writes about the iWatch and it’s success:  


It is not unusual for the Monday Note to reach for a silver lining in the Apple story. They recently wrote about the overlooked growth in Apple services. With iPhone and iMac sales hitting the skids you have to search for positives. Watches and Services are where it’s at right now.

If you think a bit about the progression between a watch all the way to connected contact lenses you can see that this tech cycle has a long way to go. I’m all down for the lenses. Would be nice to seem the application of some really big R&D dollars to advance this agenda.

As for the watch....  I will wait awhile.

*.*

Next week in Las Vegas is the Confab and you can bet that toes will be bruised from kicking over IoT rocks. Global Foundries leads off and has a been calling the IoT the Golden Age for Semiconductors. 
Here is the agenda:  


This event is kinda close to my heart because years ago I was the Chairman for the Committee that ran this conference for SEMI The whole goal of the Strategic Business Conference (SBC) was to bring the material and equipment supply chains together with the semi-fab decision makers. It was a fantastic venue and in looking at the lineup Solid State Technology has put together I am sure this one is just as good. I should really consider going to this next week given that I am on the West Coast right now. 

Either way, someone will write up the presentations and give us a few hints about the conversations.  I will be listening.

*.*

Let’s face it, all is not roses with the IoT. Many on Wall Street are skeptical about the hope and promise of this fully connected vision. I say Wall Street but there are members of the media covering the electronic industry that are just as perplexed: 



Then again….. 

*.*

Spinning today’s topic wheel for a couple more:

First hand experience:  I have brothers that are homebuilders and the labor shortage is strangling the growth of their business.  


Man, that is terrible. How are we going to deal with it?  Maybe it is not that gloomy but the stark reality is hard to grasp. How do you deal with it?  

I say, "All is not lost!"  Labor shortage?  No problem. Why not use 3D printers to build houses? Less labor, good use of material, blazing fast and cost efficient."  You've probably saw this a few years ago but it is worth another view: 


Sure, it’s not ready yet but if we can see a problem coming why not fix it now?  Never surrender, never give up!

  *.*

Fascinating…. The SEC wants leveraged ETFs (Exchange Traded Funds) to reduce their leverage because they are too risky for the average investor. Are hedge funds and banks experiencing the same thing?   


This particular piece is only of interest because I have been tracking the action in the Direxion Daily Semiconductor Bull 3X ETF (SOXL) since the first big bottom back in August of last year. It’s thinly traded but the performance has been pretty good.  

*.*

Until my next post, enjoy the bull market and have a nice day!


Wednesday, June 01, 2016

15 Year Anniversaries

Today brings us to an anniversary of sorts.  15 years ago, right near the bottom of a massive bubble, Mary Meeker provided technology investors and pundits with an efficient and very digestible 25 slides.  It’s fascinating to look back and see how much has changed:  


Every year since that first report we, the minions of the Internet, have been allowed to view Mary’s analysis of technology trends.  This year the title of her presentation is “Interent Trends 2016” and it’s a whopping 213 pages. I am going through it right now so while I am doing this I'll pitch out a few thoughts. 

If you are interested in following along, the 2016 report can be found here:


Starting off, some context is probably in order. In the 2001 report Mary estimated that there were around 300 million Internet users  This, at the time, was about 5% of the world’s population and one-third the number of people using cell phones.  Today, the estimated number of Internet users is over 3 billion or, if you wish, 42% of the world uses the web. China and India now have the largest base of users - India’s numbers are growing rapidly.  The USA is number three on the user list.  

In the beginning PCs were the primary vehicle for Internet access. From a relatively non-existent level in 2001 mobile access to the Intenet went through a dynamic and rapid phase of adoption.  Most of us have a smartphone and we use it to access the Internet on a daily basis. 

Currently it is clear, and has been for more than just the past couple of years, that the growth rate of smartphone sales is slowing.  At the same time the cost of a smartphone has come under pressure. Average selling prices for Android smartphones have dropped from $403 in 2008 to half that level.  The report points out that Android smartphones held 81% market share at the end of 2015.  Market share for iOS devices during the same period, 2008 to 2016, went from 14% to 16%.  

This pressure has caused tremendous angst for those that are in the smartphone food chain.  Apple’s woes are well documented as are the weak start-of-year conditions in China. I don’t want to beat a dead horse but in my last blog (see below) I mentioned a quote from Mentor CEO Wally Rhines to highlight this phenomena:  

"Until recently, the emergence and rapid growth of smart phones kept the semiconductor market growing, despite some dramatic changes in leadership among the chip providers. But the growth to enormous volumes of cell phone units, the changes in handset and service provider models (like the Xiaomi low-hardware margin approach) and the relative stabilization of standards has reduced the number of suppliers as well as the chip prices. The same thing happened in the PC industry, as the industry consolidated from more than 100 manufacturers of IBM-compatible PCs. While temporarily painful, those remaining companies become very efficient. And, as always, semiconductor companies can prepare for the next great wave of applications that will drive billion-unit volumes of products that are yet to be identified and developed."   

Such is the way in the smartphone business…..

I follow, er study, economics each and every day. I have been doing this since my career started back in 1983 at Merrill Lynch. One thing I have learned early in my career is that you should never trust a technology analyst to tell you what is going to happen in the economy. This comment is directed at the sections in the report detailing Global Macro Trends. Yes, Global Real GDP Growth has been slowing.  And yes, China’s excessive spending, the last 6 years being greater than the last 30, is problematic. Yes, interest rates are at historic lows. Yes, rates are low because growth is slow and monetary authorities have been desperately trying to stimulate some activity (or, extinguish fires). Yes, commodity prices have plunged because of weak demand and overcapacity.  Yes, the world’s population growth is slowing, aging and living longer.

The negatives are known by pretty much everyone with half a brain. 

Notable to me is how these macroeconomic factors, when they were in just a bit more of a positive mode, were the ones that were supposed to drive further incremental growth. Notable, at least to me, is how these negatives are interpreted as a “once-in-a-generation” phenomena - never to occur again. 

Hmmm….  I better get away from this section because I don’t want to go into a long-winded diatribe about forecasting and how general observations can become a big problem for investors. I am just going to say that I don’t like using the phrase “once-in-a-generation”.  Age doesn’t matter to me so I don’t know what constitutes a generation. <sarcasm on>  

Admittedly, Wall Street seems to be good at coining some trends so a bit of the research might be worth a view.  Earlier this year I thought this one was pretty good on Millenials:

http://www.goldmansachs.com/our-thinking/pages/millennials/

Yes, there's a section on Millenials and their preferences in Mary's report.

*.*

Next section(s)…..  Oh boy, advertising followed by retail.  I could spend all day wrapping words around these two areas but the first word that comes to mind for me is “eyeballs.”  Pretty soon the word won’t be eyeballs it will be "voice."  Yes, voice is going to make a comeback - IA (Intelligent Agents) are springing up everywhere and this is just the beginning. Just ask Alexa, Cortana, Siri or Google Voice. They know.  

*.*

There’s much more:  Platforms (think Facebook, SnapChat, Instagram, etc), video (including live streaming) and various forms of messaging are noted.  

There are slides that talk about Autonomous vehicles, Uber, China (668 million Internet users), the biggest Internet companies (Amazon, Google, Facebook, Microsoft, Baidu, Alibaba, Tencent, to name a few), M&A by non-tech companies, technology financing (bullish, go figure) Data Platforms, Data Privacy, Security, a bit on the Cloud and then back to Privacy.

*.*

I am getting bleary eyed watching these slides roll forward.  

*.*

No mention of the IoT, IoE, or the advances in medical and education platforms.  To be honest, I don’t find that disappointing. Actually, it's par for the course.  Biggest trends ever getting totally (almost)  ignored in a 213 page State of the Internet report.  <facepalm>

If you choose to view, here’s the link again:  

Your mileage may vary.



  

Monday, January 25, 2016

CEO Chattershoot

I am desperately trying to avoid mainstream media right now. Doom and gloom sells. Idiots running rampant. Exclamation points are working overtime.  

Such is life on today's Internet.

2016 is not looking like a great year for those focused on the broadest measures of the semiconductor industry. The biggest markets, smartphones and PCs, are mature and saturated. There is anticipation in the analyst ranks that a bounce in PC sales, after an abysmal stretch, is forthcoming. Given the misplaced optimism of the past I wouldn't bet the ranch on it. These two product lines, smartphones and PCs, have become replacement markets and while there is still growth, the pace is far from what we have experienced over the last 30 years. The emerging market, 3rd Wave, IoT, IoE, Sensorization, however you want to define it, is not going to blow chip demand through the roof in the very near future. Long term, there is no denying the possibilities. I'll be writing more about this in future posts.

*.*

Ed Sperling serves up 10 high level interviews with CEOs representing parts of the chip industry:
http://semiengineering.com/ceo-outlook-2016/

The subjects expressed by these executives are not all that surprising: Continuing M&A, the emerging market known as IoT, continued growth of semiconductor content in automobiles, questionable demand for new smartphones, the need for better power management, more innovation, more R&D spending and macroeconomic turbulence.

ARM' CEO, Simon Segars, comments that the outlook for market growth in 2016 is not fantastic and that pricing pressures will lead to more M&A. Synergy and innovation, in Mr. Segars view, are the positives that come from these trends.

Amkor's CEO, Steve Kelley. pins success in 2016 to the embrace of new smartphones from Apple and Samsung. He points out that 55% of the semiconductor market is tied to the mobile world.  Have to admit, that's sort of frightening when one considers recent news about weak demand for smartphones.

Jack Harding voiced a realistic opinion that looked positively at the long term impact of the IoT but at the same time downplayed the near term. Like Mr. Segars, Mr, Harding is hopeful that M&A ultimately generates innovation and more dollars for R&D. Mr. Harding voiced concerns about the macroeconomic scene - a question mark for everyone these days.

I am not going to go through each one....  You can read the rest here:  http://semiengineering.com/ceo-outlook-2016/   

*.*

Mentor Graphics CEO Wally Rhines has offered a review and preview at several publications over the last few years. His take on 2015 and 2016 can be found at the Tech Design Forum:

Part I:  http://www.techdesignforums.com/practice/technique/walden-rhines-2015-review/

In my opinion the comments about chipsets becoming commoditized, another part I've talked about over the years and one that is definitely related to the maturation process, is something for investors to keep in mind.
"Until recently, the emergence and rapid growth of smart phones kept the semiconductor market growing, despite some dramatic changes in leadership among the chip providers. But the growth to enormous volumes of cell phone units, the changes in handset and service provider models (like the Xiaomi low-hardware margin approach) and the relative stabilization of standards has reduced the number of suppliers as well as the chip prices. The same thing happened in the PC industry, as the industry consolidated from more than 100 manufacturers of IBM-compatible PCs. While temporarily painful, those remaining companies become very efficient. And, as always, semiconductor companies can prepare for the next great wave of applications that will drive billion-unit volumes of products that are yet to be identified and developed."
Part II contains an outlook for 2016:  http://www.techdesignforums.com/practice/technique/walden-rhines-2016-forecast/

Yes, there is much more to write about..... 

Monday, January 18, 2016

Strategy Read

Two posts in one day!  Mother of all miracles what is going on?

Well, it's a three day weekend for the financial markets and that provides ample time to share what we are reading.  Not that last week's market crush has anything to do with this - we read all the time.

What you will find below is a link to a big picture, macro strategy tome from one of the largest and most successful investment firms in the world.  Sure, there are millions of these out there but this one caught my eye because it speaks to so many things we have been discussing this year.

Now before you get the idea that I am touting KKR I will tell you that I am not.  I've been around long enough to know that no one is going to be 100 percent right and no one is going to be totally wrong.  I read things like this to help me understand what could happen and how I can profit from it.  This has become very important when assessing the health of the end markets.

KKR's Outlook for 2016 is appropriately titled "Adult Swim." I mentioned this in a Tweet (see the stream to the right of this page) but I think it is worth mentioning once again.

Some of the observations are very much mainstream:  tepid global GDP prospects, trouble in the Emerging Markets, pain with China's transition from a manufacturing/export economy to a consumer driven economy, the continued deflation of high risk assets and more volatility.

I do think the sections on credit, the US consumer and trade are worth reading.  Overall it's a piece I highly recommend.  

You can read the web version or download the complete report from this link:

http://www.kkr.com/global-perspectives/publications/outlook-2016-adult-swim-only

Call it, $0.02 for the jar.

Invest or Trade?

A three day weekend has provided us with a good respite from the turmoil in the financial markets.  Not that the turmoil is going to subside anytime soon - we just needed a break.  We needed a break to clear the fog and tune out the noise.

World economies are growing at a snail's pace so questions about end demand have technology investors on the edge of their seats.  News about Apple grabs the center stage each and every day.  Until Apple releases their quarterly the purported weakness in iPhone sales will haunt a good portion of the chip sector.

When Intel reported last week very few were expecting strong numbers.  There were indications from the motherboard houses that PC and notebook builds were waning.  The datacenter group continues to lead the charge but even growth rates in that segment slowed (granted, there were tough comparisons against the previous year but slower is slower no matter how you slice it).  Intel's memory business is growing nicely but it's not a needle mover.  If all the production issues are put to bed 3D XPoint will take the center stage in the last half of this year.  3D XPoint is much, much more important than the memory that comes off today's production line.

A good summary of the Intel earnings report can be found here: http://www.nextplatform.com/2016/01/15/the-glass-house-is-still-intels-piggy-bank/

Here's a decent piece on 3D XPoint as presented during this year's Industry Strategy Symposium:  http://www.eetimes.com/document.asp?doc_id=1328682

Not to be forgotten, the next quarterly report will shed some light on the integration of Altera's $400 million quarterly run rate.  Not much was said on the conference call other than things seem to be moving forward.  FPGA sales are tightly linked to growth in the economy,  Keep that in mind.

As the end markets for smartphones and PCs mature the IoT has become the next big driver for all things semiconductor.  IoT encompasses just about anything you can fathom and one can only surmise that it is in the nascent stage of implementation.  The biggest players in the chip business are screaming from the rooftops but Wall Street seems reluctant bite on the hype (I tend to agree).      

A couple of links for posterity:

Intel's IoT hoopla was all over the news during CES:

 http://www.pcworld.com/article/3019557/internet-of-things/intel-embraces-internet-of-things-puts-sensors-on-everything.html

Global Foundries foresees a Golden Age (seriously?):

http://www.timesunion.com/business/article/GlobalFoundries-sees-golden-age-of-chips-in-6754275.php

And Marc Andreesen grabs on to the 3rd technological revolution, aka, "Sensorization":

http://www.telegraph.co.uk/technology/internet/12050185/Marc-Andreessen-In-20-years-every-physical-item-will-have-a-chip-implanted-in-it.html


I could probably create a Drudge-like page and fill it with stories hyping the IoT.

*.*

Does one belly up and buy chip stocks, Intel, on this weakness?  Volatility in the markets is exceptional right now so opportunities to trade, if one has such an inclination, are available on a daily basis.  Given how I am viewing the coming year I feel as though trading seems like the right strategy.

Of course, I reserve the right to change my mind at the drop of hat.

     




Saturday, January 09, 2016

Market Tuition

During a year end Skype chat with some market participants I have known for a long time, I expressed my bullishness about the coming year.  <ahem>

Right on cue, global equity markets pummeled my view by dropping like a lead balloon. You name it, we got it. A crash in the Chinese market, lower and lower oil prices, weak economic reports, gloom and doom from Apple's supply chain, and a super-sized serving of financial media/pundit pessimism.

Yeah, I know things.....

By no stretch of the imagination do I believe the world is ending. I realize the *issues* in the global economy and the financial markets are not going away overnight.  In the 30+ years I have been following capital markets I can't tell you how many times the world was about to end. One thing I do know is that every single one of those periods provided the opportunistic investor with a chance to purchase some outstanding bargains.

Patience is key.....  

Earnings season is upon us and the preliminary indications suggest tough sledding in the semiconductor food chain.  During the past week the focus was on the business at Apple. Suppliers Qorvo (QRVO) and Cirrus Logic (CRUS) lowered their numbers. Samsung chipped in with tepid earnings guidance and Hon Hai Precision saw December sales drop 20%. TSMC's December sales were down 16% year-over-year and 8% vs. November sales.

I could go on but you get the drift. Taking just these few into consideration is enough to give one pause. Weakness appears widespread and no one wants to own a company that is about to release a crappy report.  These next few weeks will be telling.

From a strategy perspective my top priority is to check my ego at the door and really focus on what the tape is saying. Opportunities are going to appear - it is not a matter of if, but when.  

From a non-market perspective I am on a quest to do more research on disruptive technologies. It really feels like we have reached a tipping point where years of R&D in the tiny-science field will soon touch a market near you.  More to be said about this in future missives.  

Monday, January 04, 2016

Domain Transfer

FYI....   The transfer of the infras.com domain has been initiated and barring any blackholes in the transfer process the address of this site will soon change to www.infras.com.   According to the engineers at the hosting companies the transfer process could take 5 to 7 business days.

So, if you happen to be one of the faithful that actually ventures over here be forewarned that there may be a brief dead period.

Personally, I am quite happy about this because forward momentum is a good thing!  :-)

Carl