The Chip Insider May 8, 2010 Semi Stock Week: Semi stocks tumbled to new lows for the year. Stock Report: Kulicke and Soffa. WildPhotons: Short cuts... Semi Stock Week: It was a brutal week in chipmaking land as the carnage of
the past few days wiped out all the gains of the year. Chipmaking stocks saw the biggest weekly decline in more than a year as investors cashed in some of the profits and moved to less volatile pastures. Meanwhile, Europe's debt crisis continued to hamper the market amid concerns that its debt situation could spread globally. These concerns overshadowed a strong Labor Department report that showed that April's job growth in U.S. was the fastest in four years. Employers added 290K jobs in April, surpassing analysts' expectations of 187K new jobs. Moreover, March's data was revised upwards to 230K from the originally reported 162K. BESI and Oerlikon were tied up for the top spot, with their stocks finishing the week unchanged. UMC took third place with a 4.2% drop.
Chip stocks took a beating, finishing the week 7.2% lower. Equipment stocks plunged 7.9%, while VLSI's Hotties were off 8.2%. Meanwhile, the S&P 500 outperformed chipmaking stocks, declining 6.4% for the week. So here's all the data:
The stock indices are indexed to 100 at the beginning of the year. So 108 means that the index is up 8% for the year. Chips-to Coffee is the ratio of Intel to Starbucks Stock Price-to-Earnings (P/E) ratios. The P/E ratios are based on Friday's close divided by earnings per share for the most recent four quarters. Forward P/E ratios are calculated using the estimates for the next year published at Yahoo Finance. It is intended as a quick measure of how investors view the health of the chip industry relative to the trendy side of the old economy, with the view that by taking a ratio of the valuations of the leaders is an approximation of this. Both companies are the leaders in their areas as well as being leading edge in product delivery.
Chip Making Stock Performance
(Stock Prices Indexed to 100 in last week of 2009)
145 135 125 115 105 95 85 75 65 55 45 35
Nov-06 Nov-07 Nov-08 May-07 May-08 May-09 Nov-09 Jul-06 Jul-07 Jul-08 Jul-09 May-10 Jan-07 Jan-08 Jan-09 Mar-07 Mar-08 Mar-09 Jan-10 Sep-06 Sep-07 Sep-08 Sep-09 Mar-10
Stock Prices: Chips Stock Prices: Equipment Stock Prices: HT2 S&P 500
Copyright 2010 by VLSI Research Inc. All rights reserved.
Stock Watch: Kulicke & Soffa is best known for leadership in wire bonding,
which is the essential ingredient for connecting most chips to the outside world. K&S makes the equipment, tools, consumables, and also provides the technical expertise to make it happen. The company was one of the first to recognize and serve the equipment industry. It has a rich history that dates back to the very beginnings of the semiconductor industry (a more complete history can be found at The Chip History Center). One of its most important innovations in recent years was revamping the generic equipment business model to manufacture its equipment in Asia. By doing so, it became the first equipment company to successfully execute a complete shift of its manufacturing operations overseas. It was immensely successful at this and the fruits are now being paid off with the company's ability to compete with much lower costs. Kulicke & Soffa is strongly riding the current upturn. The demand for wire bonders is so high that the lead times have expanded to six months, which his unheard for backend equipment. The drivers for K&S bonders are technology leadership in Cu wire bonding and strong demand for LED manufacturing. There are over three hundred companies in China that focus on LED packaging. They may be small, but if each of them buy on average five bonders, it is one quarter to one half of a normal year's bonder demand.
SCOTT KULICKE is one of the best CEOs in the business -- in what is the most difficult sector to be in, because customers often pick higher cost-of-ownership tools simply because they are priced low. He's also got a great team in place. The technical development side is better than it's ever been. The proof of this is a very consistent new product stream and the current demand for the company's products. For more research: Kulicke & Soffa's ticker is KLIC. 100508
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