Selling into End Markets Directly Related to the Consumer: Expert Analyst Harsh Kumar Discusses Which Companies are Harbingers to the Semiconductor Cycle

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: You consider Microchip Technology a harbinger to the semiconductor cycle. So based on what is happening with Microchip, what cues should semiconductor investors take?

Mr. Kumar: So that is correct and that is a very astute point. Microchip has been harbinger for the semiconductor cycle for a couple of reasons, because they sell into the kind of end markets that are directly related to the consumer. But what makes Microchip special is that they follow a process called sell-through accounting of inventory, which means that there are no gyrations from what the supply channel or the distributors may be building in.

All of the inventory that Microchip has at distributors is Microchip's own, and only when an end customer buys something, then Microchip sees revenue. So it's a very transparent set of data that you get when you're looking at their numbers, and it's a great way to do the inventory accounting, and they are unique, because the direct consumers sort of interaction with their products. And they are feeling pretty bullish at this point in time; that's a flat-out answer.

I mean, you're starting to see not just the SMSC side; you are starting to see the core business come back. And I think it's - I'll point you to the letter again, pointing to increasing activity and design wins and sort of the wafer starts that I think are coming, and all that is a direct indication of what is about to happen in the semiconductor market, which is better trends.

And we've seen companies that have odd quarters, that have not necessarily December quarter ends, but January quarter ends that have calls that are little bit later, that have calls in March time frame, that have started to already say that right around January, trends turned pretty hard in the semiconductor sector. We hit bottom in January, February has been strong, March has been pretty strong and April continues to be pretty strong...

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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