We believe we are in the second half of a semiconductor-cycle decline. The bias should be toward building positions while being price sensitive. We believe downside risk to equipment stocks is less than potential 12-18 month rewards.
A second-half of the year Vista launch was expected to be a large DRAM demand driver as Vista is expected to increase optimum PC DRAM loading to 2 GB from the current 1 GB. With Vista now delayed until 2007, DRAM demand drivers in the second half of the year could be absent.
We are seeing some signs of selective end market stabilization, which could serve as a precursor to a directional change in semiconductor revenues in the next few months.
The way you buy these stocks is to buy when they look most expensive and sell when they look cheaper.
