The cyclical variability in the gallium market is against the backdrop of long-term secular growth probabilities. Another long-term possibility for indum gallium arsenide is to exceed the packing capability of silicon, as indicated in a recent MIT study. This message board operator cancelled my posting of a link on the subject, so if you don't believe me, you'll have to search for it. A quote:
"Matthias Passlack, of Taiwanese semiconductor manufacturer TSMC, says del Alamo's work has been a milestone in semiconductor research. 'He and his team have experimentally proven that indium arsenide channels outperform silicon at small-device dimensions,'"
AXTI competes with higher cost gallium producers. When times are good in the industry, these higher cost shops enter the market thereby creating downward pressure on the pricing. As prices plummet, profitability plummets. The higher cost producers leave the market and then supply equilibrates and prices climb again. Rinse and repeat. We are now somewhere in the bottoming phase of that cycle. How long will we be in this bottoming phase? Can it go lower? For answers to these and more questons, tune it at 11.
P.S. you can take comfort in; a) AXTI is the low cost producer so it can withstand a downturn better than its competitors; b) AXTI has $1.46 or so per share in cash; c) is debt free; and d) it appears from other semis that the semi cycle bottom is getting long in the tooth.