It looks as if the semiconductor sector will lead the world out of recession. Since mid-March, the Philadelphia Semiconductor Index (SOX) has risen from 190 to over 270.
Since March, Infineon has seen its share price rise from €0.41 to €2:50; AMD's shares have doubled from $2 to $4; STMicroelectronics's shares have gone fro €3 to €5, and Intel's have gone from $12 to $16.
Why the stock market optimism? The answers seem to be: an end to de-stocking, the large cash reserves at most chip companies and a 3.3 per cent rise on March semiconductor sales compared to February's sales.
Then came the astonishingly bullish report from the world's second largest foundry, UMC.
UMC said that its Q209 wafer shipments will be double those of Q1, and it expects its fab utilisation will shoot up from 30% in Q1 to 75% in Q2.
UMC is expecting its gross margin is expected to go from minus 40% in Q109 to plus 20% in Q2 and the company's share price has doubled since March 1st.
Foundries are bellwethers for industry demand.
Outside the semiconductor industry, there are a number of positives in the wider scene: oil prices are low, interest rates are at record lows, there's $2 trillion in economic stimulus money to be spent across the world.
It's looking good.
Leave a comment