Semiconductor bulls have received a couple of bits of encouraging news in recent days. On April 10, semiconductor foundry Taiwan Semiconductor
Sorry to disappoint you, but I don't really know. Despite the improvement at TSMC, the year-over-year comparisons still look poor -- March sales were down by 19% from last year. And with the consumer being responsible for more than 50% of semiconductor consumption, a lot depends on the economy and the effect of the ongoing housing/mortgage meltdown.
What I do know is that there are some strong trends driving this business that should remain in place for quite awhile.
During 2006, fabless semiconductor companies (those that don't do any of their own manufacturing) were responsible for 20% of worldwide chip sales, up from just 10% during the year 2000. Obviously, fabless companies are growing faster than the market -- on the whole they registered 16% growth last year, compared to just 9% growth for the semiconductor market in total.
In addition, many companies are making the decision to cut back on their investments in manufacturing facilities and are utilizing a "fab-light" strategy -- letting the specialists like TSMC, United Microelectronics
Although this will make TSMC's results volatile, and its sales haven't necessarily bottomed, I believe that it is attractive for investors with a long-term focus -- but you should convince yourself before joining me among the ranks of shareholders.
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