Interview with John Pitzer, a Managing Director, Global Technology Strategist, Technology Sector Head and Semiconductor Analyst for Credit Suisse Group: Stable Pricing for Semiconductors Exposed to Industrial, Auto and Infrastructure

Wall Street Transcript

67 WALL STREET, New York - September 30, 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, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Cloud Computing - Mobile Device Consumer Demand - Enterprise Data Storage Demand - Energy Efficiency, Cloud Computing and Telecommunications

Companies include: SanDisk Corp. (SNDK), Micron Technology Inc. (MU), Apple Inc. (AAPL) and many others.

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

TWST: What is happening in the pricing environment, and what are the implications for your semiconductor companies?

Mr. Pitzer: Pricing is one of the reasons why we like the industrial, auto and infrastructure - I/A/I - end markets over consumer, because pricing in those end markets tend to be significantly more stable than the consumer market. And clearly, one of the big structural problems in consumer end demand is that the high end of the market appears to be saturated, and there is a big structural mix shift lower within the handset market, within the tablet market and within the PC market which is putting some extraordinary pricing pressure on the chips that go into these markets.

In addition to this structural mix shift lower, we're also seeing increased competition, specifically from some of the Chinese fabless companies impacting pricing in the consumer market. The industrial, auto and infrastructure market tends to be significantly less price-sensitive, and their pricing has been relatively stable/normal versus the consumer markets, where we've seen price declines of 3% to 5% per quarter, if not greater.

TWST: In your Q2 earnings preview report you were a little concerned about overshipping. What additional information have you gotten since then, and how concerned are you at this point?

Mr. Pitzer: The semiconductor cycle is really defined as periods in which semis are undershipping end demand, those are the downturns, and then periods where semis are overshipping end demand, and those are the upturns. We've clearly gone from a period in the back half of last year where semis were...

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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