After toughing out "the worst recession the semiconductor industry has seen since its inception", things are going the way of the semi manufacturers. Strengthening consumer confidence, a growing global economy and reported increase in corporate spending have helped push the sector into positive earnings and that continued profit could have the same effect on portfolios.
Positive Circuits
Semiconductor sales fell more than 9% throughout 2009, but analysts are now predicting a wave of nearly 20% growth in sales for the sector in 2010. Consumers are parting with their hard-earned dollars in the tech sector. Research firm IDC, reports that shipments of personal computers have risen by 24% in the past quarter. The rise in e-book readers popularity, such as Amazon's (NASDAQ: AMZN) Kindle, are also having positive effects. Global e-book reader shipments are predicted to increase from 700,000 units in 2008 to more than 28 million units by 2013. Also the push for consumers to be more "green" could help the semi industry profit. As consumers buy more energy efficient appliances, the more complex the chip sets need to be in performing their functions.
The average age of a computer in corporate America is nearly five years old. While companies reduced IT spending during the downturn, these older machines are at the point where it becomes more costly to keep them running rather than buy new. Tech companies are typically one of the first recipients of increased corporate spending as their products or services help increase efficiency and growth. Analysts predict that CAPEX spending will rise by over 14% in the coming year.
The contract prices of 12-inch wafers grew 10% in the fourth quarter of 2009, 5% in the first of 2010 and the Semiconductor Industry Association announced that February sales increased 56% year-over-year. Both Texas Instruments (NYSE: TXN) and LSI (NYSE:LSI) raised their guidance, and tech bell-weather Intel (NASDAQ: INTC) reported soaring earnings, topping estimates by 13.2%.
A Chipper Portfolio
The semiconductor industry is one of a cyclical nature. While Intel's blowout earnings have caused the overall sector to spike over the past few days, it's not too late to ride the next wave in the sector. A growing global economy and increased tech spending should keep the upsurge going. Exchange-traded funds (ETFs) can provide an easy way to own a basket of various semi manufacturers with the ease of holding a single ticker.
The iShares S&P North American Tech-Semiconductors (NYSE: IGW) is the second largest ETF in the sector based on assets, and holds 52 stocks. This includes an 8.5% weighting towards Intel. The equal-weighted SPDR S&P Semiconductor (NYSE: XSD) might be a better choice for investors with its lower expense ratio and more concentrated 27 stock portfolio. The SPDR's portfolio has outperformed IGW over the last year ending in March, by nearly 16%. The SPDR charges 0.35% in expenses.
The most heavily traded choice in the sector is the Semiconductor HOLDRs (NYSE: SMH). The Holding Company Depositary Receipts is made up of a basket of stocks that never get rebalanced or reconstituted. The current mix contains 18 stocks, including Analog Devices (NYSE:ADI) and Applied Materials (NASDAQ: AMAT). The HOLDRs' interesting structure could be a boon or bust depending on the sector it tracks - just ask investors in the B2B Internet HOLDRs (NYSE: BHH). SMH trades in units of 100 and can be unbundled into the individual stocks. Investors get to keep the voting and dividend rights of the underlying stocks.
Bottom Line
Things are looking quite chipper in the semiconductor sector going forward. The semis are poised to capitalize on the growing global trends and increases in corporate and personal spending. Recent knockout earnings from a few of the leaders in the sector have helped point the way for the next bull market cycle in the sector. Adding a dose of chips to a portfolio via ETFs will help investors cash in on this growth. (For related reading, take a look at Technology Sector Funds.)
Source : http://stocks.investopedia.com
Sunday, April 25, 2010
Saturday, April 24, 2010
Budget deficit countries ....
Iceland : 14.3 (IMF bailout completed)
Greece : 13.6 ( IMF bailout in progress )
Spain : 11.2
Portugal : 9.4
China : 2.2
Which country will be next ?
Greece : 13.6 ( IMF bailout in progress )
Spain : 11.2
Portugal : 9.4
China : 2.2
Which country will be next ?
Friday, April 23, 2010
US New Home Sales Surge 27%, Blowing Past Estimates
Sales of new homes surged 27 percent last month, bouncing off the previous month's record low and blowing past expectations as better weather and government incentives boosted sales.
AP
New home sales rose 26.9 percent in March.
________________________________________
The Commerce Department said new home sales rose in March to a seasonally adjusted annual sales pace of 411,000.
It was the strongest month since last July and the biggest monthly increase in 47 years.
Economists surveyed by Thomson Reuters had expected a sales pace of 330,000.
February's results were revised upward to 324,000, but remained an all-time low. Sales had been especially weak over the winter, partly due to bad weather in much of the country.
Source CNBC ....
Look out for timber related industry !!
AP
New home sales rose 26.9 percent in March.
________________________________________
The Commerce Department said new home sales rose in March to a seasonally adjusted annual sales pace of 411,000.
It was the strongest month since last July and the biggest monthly increase in 47 years.
Economists surveyed by Thomson Reuters had expected a sales pace of 330,000.
February's results were revised upward to 324,000, but remained an all-time low. Sales had been especially weak over the winter, partly due to bad weather in much of the country.
Source CNBC ....
Look out for timber related industry !!
Thursday, April 22, 2010
Malaysia Furniture exports to hit RM9bil this year
GEORGE TOWN: The Malaysian Furniture Entrepreneurs Association (MFEA) expects revenue from furniture exports to hit RM9bil this year.
MFEA president Lor Lean Sen said the industry was unlikely to meet the Government’s RM10bil target this year as the global economy was still soft.
Lor Lean Sen ... ‘The world economy is still recoveri ng, so RM9bil is a more realistic target for this year.’
“In 2008, export revenue was RM8.7bil. It dropped to about RM8bil last year due to the economic crisis. The world economy is still recovering, so RM9bil is a more realistic target for this year,” he told StarBiz.
About 20% of MFEA’s 3,000 members are involved in the manufacturing and export business.
The industry’s main export markets are the US, Japan, Europe, Australia and the Middle East.
Lor said business was picking up again for the industry.
“We estimate that RM500mil worth of sales were concluded at the recent Export Furniture Exhibition in Kuala Lumpur, which is about 30% higher than last year,” he said.
MFEA advisor Cha Hoo Peng said the wood-based furniture manufacturing business in Malaysia had picked up over the past six months.
He said it was now becoming expensive to manufacture furniture in China due to rising labour costs and the country’s need to import raw materials.
“Malaysian-made wood-based furniture are competitively priced in the international market, ranging between RM1,000 and RM1,500 per set. This is about 5% higher than the pricing in January.
Ooi Ah You says automation will help Green Continental Furniture to reduce dependency on foreign workers by 15% to 20%.
“Even if rubberwood prices go up in future, the margin of increase in selling prices will still be around 5%,” he said.
However, Cha said China was still competitve in the steel furniture segment.
“This is because China is a large producer of steel. This enables manufacturers to price their steel furniture much more competitively than Malaysia,” he said.
Green Continental Furniture Sdn Bhd, an original design manufacturer, expects revenue to grow by about 15% to RM130mil this year.
Executive director Ooi Ah You said the company would invest between RM2mil and RM3mil this year to automate its manufacturing facilities in Kulim Industrial Estate and China.
“This will reduce our dependency on foreign workers by 15% to 20%,” he said. The company employs about 900 workers, of which 300 are foreigners.
Penang-based Omega Sdn Bhd, a sofa manufacturer, expects to produce some 1,500 sofas per month by mid-2010.
Managing director Michael Chew said “the increase in production is to meet rising orders from our customers in Australia, Europe and the Middle East.”
Chew said the company exported over 70% of its products while 30% were sold in the domestic market.
He said the sofas were priced between US$300 and US$1,000 in the international market, depending on the grade and quality of the leather.
MFEA president Lor Lean Sen said the industry was unlikely to meet the Government’s RM10bil target this year as the global economy was still soft.
Lor Lean Sen ... ‘The world economy is still recoveri ng, so RM9bil is a more realistic target for this year.’
“In 2008, export revenue was RM8.7bil. It dropped to about RM8bil last year due to the economic crisis. The world economy is still recovering, so RM9bil is a more realistic target for this year,” he told StarBiz.
About 20% of MFEA’s 3,000 members are involved in the manufacturing and export business.
The industry’s main export markets are the US, Japan, Europe, Australia and the Middle East.
Lor said business was picking up again for the industry.
“We estimate that RM500mil worth of sales were concluded at the recent Export Furniture Exhibition in Kuala Lumpur, which is about 30% higher than last year,” he said.
MFEA advisor Cha Hoo Peng said the wood-based furniture manufacturing business in Malaysia had picked up over the past six months.
He said it was now becoming expensive to manufacture furniture in China due to rising labour costs and the country’s need to import raw materials.
“Malaysian-made wood-based furniture are competitively priced in the international market, ranging between RM1,000 and RM1,500 per set. This is about 5% higher than the pricing in January.
Ooi Ah You says automation will help Green Continental Furniture to reduce dependency on foreign workers by 15% to 20%.
“Even if rubberwood prices go up in future, the margin of increase in selling prices will still be around 5%,” he said.
However, Cha said China was still competitve in the steel furniture segment.
“This is because China is a large producer of steel. This enables manufacturers to price their steel furniture much more competitively than Malaysia,” he said.
Green Continental Furniture Sdn Bhd, an original design manufacturer, expects revenue to grow by about 15% to RM130mil this year.
Executive director Ooi Ah You said the company would invest between RM2mil and RM3mil this year to automate its manufacturing facilities in Kulim Industrial Estate and China.
“This will reduce our dependency on foreign workers by 15% to 20%,” he said. The company employs about 900 workers, of which 300 are foreigners.
Penang-based Omega Sdn Bhd, a sofa manufacturer, expects to produce some 1,500 sofas per month by mid-2010.
Managing director Michael Chew said “the increase in production is to meet rising orders from our customers in Australia, Europe and the Middle East.”
Chew said the company exported over 70% of its products while 30% were sold in the domestic market.
He said the sofas were priced between US$300 and US$1,000 in the international market, depending on the grade and quality of the leather.
Friday, April 16, 2010
Traditional Chinese Medicine ...
Christian Hogg, CEO of Chi-Med says that China's traditional medicine industry is experiencing strong growth and his firm is focused on developing such botanical drugs for the the U.S. and European markets. He talks to Han De Jong of ABN Amro Private Banking and CNBC's Martin Soong and Karen Tso.
http://www.cnbc.com/id/15840232?video=1468344304&play=1
http://www.cnbc.com/id/15840232?video=1468344304&play=1
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