SAN FRANCISCO -- For 10 months, last year looked to be a dog for semiconductors and particularly for semiconductor-equipment stocks. October's turnaround whipsawed the market, however, and saved the day for investors who were long semis. But now what?
More pain is on the horizon. That's because chip companies are battling on two fronts -- the high-end gigabit market for high-speed networks and the PC market where computer prices sink below $400. These are both new frontiers where the old powers have little influence: No player is guaranteed market dominance.
The year is starting off nicely though. The
Philadelphia Semiconductor Index
at 490 is less than 1% below the all-time high it hit during August 1997. And
Morgan Stanley Dean Witter
semiconductor sage Mark Edelstone is raving about a three-year up-cycle. Chip investors may indeed be saying, "What, me worry?"
The chip world will also be dominated in the coming year by a price and market-share war between
Advanced Micro Devices
. The battle will be waged on two fronts: between Intel's Pentium Xeon processor AMD's K-7 chip on the high end and Intel's Celeron and AMD's K-6 chip on the low end.
But how, and when, should investors check the score? Here are a few crucial events:
Consumer Electronics Show, Las Vegas. Jan. 7-10
Here's where you'll hear plans by the
that will affect the chip industry. In particular, a session on Jan. 8 on broadband technology will feature executives from
, Intel and
Intel Fourth-Quarter Earnings. Jan. 12
Were fourth-quarter Christmas sales as good as Intel investors believed last month? Were investors right to ignore
analyst Thomas Kurlak's warnings about pricing pressures and declining earnings, as they pushed Intel shares to all-time highs? Or has the company been able to cut enough costs from its manufacturing processes to actually come out with a cheaper Celeron without sacrificing profit margins? The numbers will tell.
AMD Fourth-Quarter Earnings. Jan. 13
The antidote to the Intel love potion is mustachioed AMD Chairman Jerry Sanders, and you can bet he'll hand out glowing news about the low end of the PC market. Not that you can bet on it.
IBM Fourth-Quarter Earnings. Jan. 19
If you are taking what Sanders has to say with a grain of salt, listen for how many sub-$600 computers
has been selling with neither Intel nor AMD inside. IBM's low-end machines, which could attract corporations to this low-priced market, have
NationsBanc Montgomery Securities Technology Week, San Francisco. Feb. 1-4
At the last big Montgomery investment conference in mid-September, most chip and equipment execs had terrible numbers to show, and money managers out looking for bargains were holding their noses. This time around, they'll have to look harder for bargains because valuations are nearing ridiculous levels. Instead of looking for news to buy on, they might be listening for signs to sell.
BancBoston Robertson Stephens Tech '99, San Francisco. Feb. 22
Watch for movement on
. Since July, every time Micron vice president of corporate affairs has spoken to money managers in investment conferences, the stock has moved up. It happened after the
conference on July 30 (up 7%), the
NationsBanc Montgomery Securities
conference on Sept. 18 (up 7%) and the
CS First Boston
conference Dec. 3. Let's see what investors will do this time around.
Intel Developer's Forum, Palm Springs, Calif. Feb. 23
Twice a year, Intel gathers software developers to show off its latest designs. In its fall conference, Intel announced a push toward low-priced notebooks and PCs and told software developers that it was embracing a new UNIX standard. This is the forum for the company to divulge changes in its strategic direction -- to make any move without the support of the world's software developers would be folly.
Dataquest Predicts '99, San Diego. March 22
Which markets are going to be hot and which not in the next millennium? Should you invest in notebook chips? How about graphics accelerators? What's the competition going to be like in digital signal processors and analog chips? These guys are the number-crunchers and market forecasters.
Intel Spring Analysts Meeting, New York. April 22
It was at the Nov. 1 meeting in San Francisco when Kurlak first hinted that he might have to revise his bearish outlook on Intel's future. But the semiconductor industry and Intel in particular have trouble looking six months ahead. Just about now, Intel should be introducing its high-margin Katmai chip for servers, which would help make up for profits lost in the bloodier low end of the market.
The Fabless Semiconductor Association Quarterly Roundtable, San Jose. April 29
This is the trade organization for all the chip companies that contract out their manufacturing. And here is where the FSA announces the results of the its yearly Wafer Demand Survey -- a measurement of how much equipment needs to be bought to meet future capacity needs. In other words, these numbers will show the current and future health of the fabless chip companies as well as the equipment makers.