DRAM spot prices have given back most of their gains since the post Lunar New Year rally.
NAND spot has come in slightly but is still up quite a bit since the holiday.
Taiwan has set a budget of $2 billion to encourage consolidation among the DRAM industry. Micron (MU) has been actively seeking a key role in the Taiwan memory industry’s restructuring and stands to benefit greatly from the inevitable reduced capacity coming from Taiwan after the dust settles.
Digitimes is flush with stories of better notebook trends in February, led by Asustek, HP, Apple and Toshiba. End market demand still remains in question, but there is some near-term inventory restocking, according to most of these stories. Digitimes claims Taiwan Semiconductor has seen some rush orders lately from Qualcomm (QCOM), Infineon (IFX) and MediaTek and has recalled some furloughed workers, according to the Commercial Times. Xilinx (XLNX) and Altera (ALTR) have firmed up due to 3G deployments in China following new license awards last month.
The Skew: Seems kind of early for inventory restocking to rush back significantly but semis tend to overreact. Tech has been acting better than the rest of the market for the last several sessions. Valuations in the semiconductor space are better on a price to book value than they’ve been several years but the demand environment is highly uncertain. The problem is earnings estimates have come down pretty significantly, too, and will likely stay punk till the second half at least. February strength is very unseasonable and is likely related to overly aggressive inventory destocking. It won’t be a sustainable pick-up without better economic tone.
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