Wednesday, February 22, 2006

Anxious Moments

Anxious Moments Typically I do not promote front page news sites but for some reason today's quick glance through the headlines and stories over at Silicon Strategies seemed to generate a nice frame for some big picture analysis. Here are a few thoughts, crammed into a nutshell: IP alliances are going to be big this year. Probably bigger than last year. Patriot Scientific? There's nothing like an old IP library coming out of the blue! Add these two ventures to the mix: TEL and ATMI; Cymer and KLA-Tencor. On the opposite pole, wars will continue on the IP front. Micron and Rambus - an on-going story. There will be an endless debate about demand for Flash and the shift in production capacity away from DRAM. Does that story ever end? Today's notes out of SPIE tell the tale about the lithography world. We've had an on-going discussion about litho in other areas of this site so it should not be surprsing to read that the implementation phase, at least for several technologies, seems to be stretching out. By extension, one might suggest that the struggles in litho means other areas need to be strengthened. Metrology? How about better materials? Ahh... Another day, another batch of headlines.... ------------- For most of the day eyeballs here have been focused on the action in the stocks. Good news is greeted by skepticism. Odds are pretty good the action in the stocks pushed some of the sell-side analysts over to the dark side. What's interesting about this is that during the same week one of the larger, well-known industry forecasting firms, Semico Research, was raising their industry estimates. A positive forecast is nice to see but to make money we have to listen to the market. I've talked about forecasts in some of my posts. At this very moment I don't want to fight the optimistic tone from those in the business but at the same time I believe a lot of the strength can be explained by the seasonal tendencies of the industry. Frankly, those patterns are almost too obvious. Whether or not this year ends up being front-end loaded or one that rockets into '07 the longer term questions remain: "How much leverage will it take to drive share prices higher? For these companies to really make money what level of business is required? Is +17% growth in the semiconductor industry enough?" Anxious moments for investors...

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