I am not talking my book (well, I guess I am if I am a counter-cyclical gold bug) because I am significantly more long than short the market at the moment. I am simply talking a book that does not care what is written in my book, your book or anyone else’s book.
In 2013 the Semi and in particular Semi Equipment sector gave its cue – with a long lead time – that a positive cycle would eventually be coming to the greater economy. The canary was chirping happily.
I remember how long it took (err, years) for our progression to play out as something like… Semi Equipment → Semi → Tech → Manufacturing → General Economy → JOBS!!!
So today as we have our second blow out jobs number in a row we might recall that general employment is a laggard. We might also recall that a cyclical leader is under stress, and not only due to the trade war. There was some serious over-building going on over the last few years.
I checked back on the Semi Equipment sector because I saw nice charts for AMAT and LRCX and even some hints that they might re-establish leadership to broader Semi. But then, this…
Of course the report was written right in the middle of the December puke fest. Maybe happy days really will be here again before long and the charts are leading. Then again, maybe not.
Here are the projections for Fab spending in 2019 vs. 2018. Korea projections have been brutalized. Look at China’s projected deceleration.
The whole article is (IMO) worth your while, but this was particularly concerning…
The recent three-year boom in the semiconductor market was chiefly driven by the memory sector (e.g. DRAM and 3D NAND flash). One company, Samsung, invested at unprecedented levels, lifting the entire industry. Other memory makers rode the wave of the boom cycle by boosting investments. And China’s profile rose with its huge investments. The industry was poised for four consecutive years of revenue growth – a streak not seen since the 1990s.
Now the industry faces well-known threats of inventory correction and the trade war. Both phenomena could slow growth significantly and if both unfold in full force in tandem, the impact could be serious. The data in SEMI’s latest publication of the World Fab Forecast show that the four-year growth streak will not materialize.
So maybe SEMI, the recognized industry source for Semiconductor industry status, is being a Gloomy Gus and not with the bullish program. Or maybe this same source, which gave us our bullish heads up in 2013, will be right again.
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