Semiconductor book to bill stands around .61. Look for that to increase, as factory utilizations rise. In Korea, factories are running north of 90%, in anticipation of fervent demand. However, in Taiwan (semiconductor capital of the world), they are only running at 60%. As utilizations rise, demand for tools and supplies will follow. As a point in fact, right now there are major supply shortages, which is sending the price of chips up.
Some plays include [[CDNS]], [[AMKR]], [[SPIL]], [[KLIC]], [[TQNT]], [[ASX]], [[TER]] and long shot [[ENTG]].
As [[TSM]] and [[UMC]] upgrade to next generation facilities (40nm, 32nm), parts suppliers like [[NVLS]], [[LRCX]], [[AMAT]], [[KLAC]], [[ASML]] and [[VARI]] are worth buying.
As 802.11 becomes mainstream, [[ATHR]], [[BRCM]] will be your dominant players, with [[NTGR]] not too far behind. [[ARUN]] is a minor player and takeover target. And, [[RFMD]], [[SWKS]] are plays on chips in handsets. As end user demand increases, so does their chips.
[[OVTI]] is a great iphone 3 play, due to [[AAPL]] contracting them for embedded cameras. OVTI also has back up cameras on cars.The handset market is in the midst of transition, from idiotic flip phones to smart phones with touchscreens. [[STAR]] dominates the core router market in the U.S. with 80% CDMA share. Touchscreen supply and design makers [[SYNA]] and [[CY]] will benefit from phones going buttonless to iphone-like touchscreens. [[CLS]] is a dominant contract manufacturer for the handset market.
I could see [[CSCO]] eating STAR whole for lunch.
Demand for LCD screens have spiked, recently. As a result, prices are ripping higher, particularly for small screens (16×9). [[GLW]] makes the glass and [[AUO]] makes the damn tv. Margins are improving.
Due to bandwidth demand, thanks in large part to smart phones, 3g networks are stretched. As a result, [[VZ]], [[VOD]], and most major telcos, are upgrading to 4g. Key players will include: [[STAR]], [[ERiC]], [[ALU]], [[CIEN]] and [[LVLT]]—amongst others.
Bottom line: The above is a story that will play out over an extended period of time. I do not expect the above stocks to go up in a straight line. Food for thought.
UPDATE: I bought 10,000 CDNS @ $ 4.81 and 5,000 NVLS @ $17.57.
UPDATE II: I bought 10,000 [[ARUN]] @ $4.45
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