Credit Suisse Managing Director, Technology Head and Semiconductor Analyst John Pitzer has Top Ten 2013 Interview: More Secure ROI Dynamic for Analog Versus Digital in the Semiconductor Sector

Wall Street Transcript

67 WALL STREET, New York - December 9, 2013 - The Wall Street Transcript has just published its Top Ten Equity Analyst Interviews of 2013 Report. This special feature contains expert industry commentary through in-depth interviews with highly experienced and award winning Equity Research Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Semiconductor Sector Economics and Top Stock Picks

Companies include: Linear Technology Corp., Fairchild Semiconductor International, Cypress Semiconductor Corporation, Apple Inc., Taiwan Semiconductor, Intel Corporation, QUALCOMM Inc., Broadcom Corp., Altera Corp., Cisco Systems, Inc., Texas Instruments Inc., Analog Devices Inc., SanDisk Corp., Micron Technology Inc.

In the following excerpt from the Top Ten Equity Analyst Interviews of 2013 Report, an experienced Credit Suisse Technology research analyst discusses the outlook for the sector for investors:

TWST: You expect a less-than-normal recovery for semiconductors. What factors are contributing to that view? And what level of growth do you expect to see from the sector over the rest of 2013?

Mr. Pitzer: We're projecting low single-digit revenue growth for 2013. If you look at a normal cyclical recovery in the industry, from trough revenue to peak revenue, you can see as much as 30% to 35% growth, and we think it's going to be less than half of that - closer to 15% this recovery.

And again, if you look at the cyclical dynamics in the industry, one of the charts investors really key in on is one of semiconductor units over a long period of time versus some sort of trend line growth. I think what the boards have been trying to say is that if you look where semiconductor units are compared to the historic trend line, we're about 20% below trend line growth.

And typically, when you're that far below trend line, there is a sort of Pavlovian response that was at the bottom of the cycle, and just getting back to trend line growth would be - would drive significant trough-to-peak revenue growth for the industry. The problem we have is we think the trend line has been violated, and historically semiconductor units have grown at 8% to 9% unit CAGR; we think it's now closer to 3% to 5%.

TWST: I want to dive into your earlier point about structural weakness in the end-market demand. What's going on in the various end markets; which are the weakest, and which have a little bit more robust demand right now?

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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