Comments on: Why the chip stocks are down

Semiconductor stocks have significantly underperformed the market for five years, even though worldwide chip sales have seen double-digit growth during that period. Here's why.

[bikerinpa]

Re: For example, the current memory chip glut has weighed heavily on the entire sector, since memories account for more than 20 percent of the total semiconductor market.


Why would the memory chip market hurt the overall semi sector more than in the past? It accounts for 20% of sales now, whereas in the past it accounted for 45%.

[stobak]

When a major group experiences oversupply, it drags down the indices and can cause investors to "throw the baby out with the bathwater." If post dot-com bust investors are skeptical of the chip sector, the likelihood of that happening increases. I think that's what we're seeing.

[Semi On]

Commodities are dragging down the sector? ONNN is up almost 300% over the same timeline. National is up ~100%. Both are more commodity suppliers than ST with their ASIC business.

[stobak]

On Semi's stock perked up when it turned a profit in 05+. The same is true of National. Change in fundamentals for a specific company can trump a sector trend. There are hundreds of companies to pick apart; we're talking about general trends here. Of the top 10 or 15 companies, the winners have clearly been companies with proprietary technology used in hot, growing markets.

Steve Tobak