With many questioning whether or not the semiconductor space has reached its peak or is dangerously teetering on the top of its rally, one analyst maintains a bullish take on the industry, citing strong macroeconomic trends and better-than-expected PC sales as two demand drivers.
“I upgraded my group, the equipment space, in May of 2009. It’s worked out pretty well up to this point,” said Patrick Ho, an analyst at Stifel, Nicolaus & Co. “I think we’re going to see a very good 2010. I’m not a subscriber to the view that things will peak out mid-year, which is what I think some of the bears are saying right now, and the second half of the year is going to be down from the first half of the year. I do not believe that.”
Ho believes last year’s launch of Windows 7 will translate to additional semiconductor demand, as the corporate world begins to update computers from the now 5-year-old Windows XP.
“If you got old PC systems that need to be upgraded, this could the perfect opportunity because you’ve got higher DRAM speed in memory devices, and you’ve got the new operating systems,” Ho said. “This would be the key driver, I think, on the memory side of things.”
The analyst also points to two more recent electronics launches, the Google (GOOG) phone and Apple’s (AAPL) iPad, as drivers of increased handset sales and chip consumption.
“Particularly, again, on the memory side of things, that’s going to be a driver, I think, for additional equipment spending because if the unit goes up, then unit devices go up,” Ho said. “That’s going to help, or that’s going to stimulate additional equipment spending because you have to get those production lines up to meet that type of demand. So I’ve got a pretty bullish view for 2010.”
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