Positive Trends as Semiconductors Grind Out the Growth: A Wall Street Transcript with Harsh Kumar, Managing Director and Lead Semiconductor Research Analyst for Stephens, Inc.

Wall Street Transcript

67 WALL STREET, New York - May 23, 2014 - 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: Mobile Device Consumer Demand - Enterprise Data Storage Demand - Energy Efficiency, Cloud Computing and Telecommunications - Improvement from Cyclical Bottom - Semiconductor Capital Equipment Spending - Data Growth Trends - Semiconductor Revenues and Demand - Chinese Fabless Industry Growth

Companies include: Intel Corporation (INTC), QUALCOMM Inc. (QCOM), Broadcom Corp. (BRCM), RF Micro Devices Inc. (RFMD), Skyworks Solutions Inc. (SWKS), TriQuint Semiconductor, Inc. (TQNT), Integrated Device Technology I (IDTI), Texas Instruments Inc. (TXN), Dover Corp. (DOV), Apple Inc. (AAPL), Diodes Incorporated (DIOD), Microsemi Corp. (MSCC) and many others.

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

TWST: Where are we in the semiconductor cycle, and what does that mean for semiconductor investors at this point?

Mr. Kumar: I think we're still relatively early. It seems like the economic cycle began about three years ago. The semiconductor cycle I think began about the same time, but what we've noticed historically is that the semiconductor cycle typically tends to mimic the economic cycle. I think we started noticing very positive trends last year; we're seeing some continuation of that this year.

This year, I would almost describe our current environment as a slow, steady, almost grinding kind of growth. The positive of that kind of dynamic is that you typically don't get inventory bubbles, because there is no need for customers to go out and overorder or double-order from the suppliers, because the growth isn't excessive. And so those inventory bubbles that are dangerous to semiconductor investors don't typically form, but you're able to get leverage if you are a company, because you are seeing growth and your operating costs do get rationalized. So we're still very constructive on the macro.

Most geographies are growing. Most end markets are growing. Two days ago Intel (INTC) even said that the PC market is stabilizing - which is very healthy - for the first time in a year and a half that I can remember. On the other side corporations are getting better, consumers are getting better, feeling better and overall things are great; industrial, automotive, comm should be on average a mid-single-digits grower. PC should be flattish, which is better than the last couple of years, and consumers should be up in mid-to-high single digits for the year.

TWST: Based on where we are in the cycle and other macro factors, which end markets do semiconductor companies want to be exposed to and why?

Mr. Kumar: I think typically in this kind of an environment you want to be in industrial, because for the first time in several years you're seeing the corporation spend money on building their own infrastructure...

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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