This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Chip-Equipment Market: Uncertain 2010

NEW YORK ( TheStreet) -- I pointed out last week that semiconductor manufacturers need to spend in order for the equipment manufacturers to exhibit any real recovery, something that has eluded the sector as a whole since 2001.

Within the past month, many experts have announced extraordinary gains to be made in the semiconductor equipment market in 2010. In recent weeks, trade group SEMI and market research firm Gartner/Dataquest have issued forecasts calling for the chip-equipment market to grow in excess of 50% in 2010, following a decrease of nearly 50% in 2009. iSuppli last week called for 46% growth.

Part of the basis for these forecasts certainly must have come from announcements of large planned increases in capital expenditures, particularly among the memory manufacturers.

I noted that according to IC Insights, the $1 billion capex spenders include the following firms in 2010: Samsung ($6 billion); Intel (INTC - Get Report) ($5.3 billion); Taiwan Semiconductor (TSM - Get Report) ($3 billion); Hynix ($2 billion); Toshiba ($1.95 billion); GlobalFoundries, a partnership that includes Advanced Micro Devices (AMD - Get Report) ($1.9 billion); Micron (MU - Get Report) ($1.3 billion), Nanya ($1.1 billion) and Elpida ($1 billion).

It is important to realize that capex is dynamic. Some companies will alter plans and spend less or more depending on conditions. Some will spend all their money in a short amount of time rather than spreading it evenly throughout the calendar year.

I also noted in a previous article that these forecasts beg the question : How will the equipment market grow 50+% in 2010 with no new fabs and no new capacity additions when it dropped nearly 50% in 2009 with no new fabs and no new capacity additions? This leads to a follow-up question: Will technology purchases alone sustain 50% growth?

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AMD $2.69 0.00%
GOOG $542.56 0.00%
INTC $30.81 0.00%
LRCX $70.26 0.00%
MU $27.13 0.00%

Markets

DOW 17,698.18 -77.94 -0.44%
S&P 500 2,059.69 -8.20 -0.40%
NASDAQ 4,880.2280 -20.6570 -0.42%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs