More Secure ROI Dynamic for Analog Versus Digital in the Semiconductor Space: John Pitzer, Managing Director at Credit Suisse Group, Interviews with The Wall Street Transcript

Wall Street Transcript

67 WALL STREET, New York - May 28, 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: Linear Technology Corp. (LLTC), Fairchild Semiconductor Intern (FCS), Cypress Semiconductor Corporat (CY), Apple Inc. (AAPL), Taiwan Semiconductor Manufactu (TSM), Intel Corporation (INTC), QUALCOMM Inc. (QCOM), Broadcom Corp. (BRCM), Altera Corp. (ALTR), Cisco Systems, Inc. (CSCO), Texas Instruments Inc. (TXN), Analog Devices Inc. (ADI), HJ Heinz Co. (HNZ), SanDisk Corp. (SNDK), Micron Technology Inc. (MU) and many more.

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

TWST: What is the competitive environment like for semiconductor companies right now, and what do you think tends to give a company competitive advantages?

Mr. Pitzer: I think we are the odd man out, and still being bullish on Intel (INTC). Everyone thinks we're crazy, because everyone hates PCs. Our bullish stance on Intel has very little to do with the PC market. Now, to be clear, we have been less bearish than most on PC demand, but the reason we are bullish on INTC has much more to do with Moore's Law. Gordon Moore, one of the original founders of INTC, came up with the observation that every 18 to 20 months the semiconductor industry is able to double the number of transistors per given area of silicon. That's what Moore's Law is. Effectively, what does that mean? Semiconductors can take down cost by 50% every 18 months, or for the same cost, they can double performance.

Moore's Law has been the cornerstone of not just semiconductor economics, but technology economics for over 40 years. Technology is all about faster, cheaper and smaller, impossible to do without Moore's Law. It is our view that Moore's Law is getting much more challenging to implement. The capital burden to build leading-edge facilities is growing up nonlinearly, and fewer and fewer players could actually scale in the Moore's law curve. It's our view that Intel will be the last man standing on Moore's Law. Before they are right, they will find multiple ways in which to monetize that in their core business by bringing out incremental performance that people will pay for, and in the nontraditional markets of tablets and smartphones by getting down their cost points and performance points that other people won't be able to match.

In addition, relatively new venture for Intel, they are finding ways to monetize that by being a foundry. TSMC is a foundry, which is basically a company that solely manufactures chips. They don't design chips, so they'll take a design from a tablet company and manufacture it for them. Probably two of the best well-known tablet companies are companies like Qualcomm (QCOM) and Broadcom (BRCM). They do all their manufacturing today by TSMC.

What you are seeing is Intel's manufacturing lead is stretching out, but Intel is 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.

View Comments (0)