A Dramatic Expansion of the Middle Class in China and India Driving Home Appliance Sales: Expert Analyst Harsh Kumar Discusses Emerging Semiconductor Markets

Wall Street Transcript

67 WALL STREET, New York - June 3, 2013 - The Wall Street Transcript has just published its Semiconductors Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Semiconductor Capital Equipment - Cloud Computing, Mobile Device Consumer Demand - Semiconductor Inventory Burnoff - Improvement from Cyclical Bottom - Semiconductor Capital Equipment Spending - New Computing Platform Demand

Companies include: Intel Corporation (INTC), Texas Instruments Inc. (TXN), Apple Inc. (AAPL), RF Micro Devices Inc. (RFMD), Skyworks Solutions Inc. (SWKS), Broadcom Corp. (BRCM), QUALCOMM Inc. (QCOM), Microchip Technology Inc. (MCHP), Cree Inc. (CREE), Analog Devices Inc. (ADI), Diodes Incorporated (DIOD), Microsemi Corp. (MSCC), Semtech Corp. (SMTC) and many more.

In the following excerpt from the Semiconductors Report, an expert analyst discusses the outlook for the sector for investors:

TWST: In which emerging markets have you seen, or do you expect to see, growth in the semiconductor industry? What is driving that growth, and which companies from your group stand to benefit from that trend?

Mr. Kumar: So it's widely understood that the folks in China and India are seeing some wealth, to put it bluntly. There is dramatic expansion that is going on in the middle class - it's burgeoning, if you will. And the middle class is seeing disposable dollars come to them, and that's driving pretty big chunk of change for appliances that we use that we take for granted here in the U.S.

We always hear in the press about sort of the ultrarich in China buying fancy cars, but the bigger market, almost by orders of magnitude, is this burgeoning middle class that's taking over that's buying refrigerators, fridges, appliances and things of that nature.

So one of the great stocks that we have that plays into that theme is a company called Microchip (MCHP), and I want to mention for the record, last year it was a favorite pick. This year was, simply put, RFMD because we saw better prospects, but we still continue to like Microchip, and we think it is very misunderstood in the minds of the investors.

But Microchip has exposure to the automotive market and the industrial market, which are doing well right now, but they also have exposure directly to the housing market both in the U.S. and internationally, as well as the consumer markets. When you think of homes, think of coffee makers, appliances, garage store openers, sprinkler systems, any kind of electronic tool that you might have, they have exposure to all that.

They acquired a company called Standard Microsystems, SMSC, I want to say about April/May timeframe of last year, and the acquisition was grossly misunderstood by Wall Street. When the acquisition was done, both sell side and buy side widely thought...

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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