Nothing bothers me more about the lack of market movent than the SOX!
I've been complaining about the SOX since the Summer and, although they've recovered about 50% off their July lows, the semiconductors are still a far cry from last year's highs, which came in the late winter.
It was the turn in the SOX, back in Mid August, that gave me the confidence to call for a "Major Upswing" in the markets at the time when I said: "If we get the same kind of breakout on transports (another 100 pts) we could be seeing a new all-time high for the Dow and S&P."
The actual Philadelphia Semiconductor Index contains just 19 companies and today it was not possible for BRCM (+.73%), INTC (+1.75%), KLAC (+.59%), IFX and MRVL (both flat) to hold up the 14 losers, led by TER (-2.4%), LLTC (-1.7%) and AMD (-1.7%).
Teradyne managed to drop 2.4% despite an upgrade (well, to neutral) by HSBC Securities. They had dreadful earnings on Thursday but I think they are mostly being dragged down by the sector with their close competitors just bottoming out, all well below TER's flat YTD performance.
Linear Tech is also scraping rock bottom as they missed estimates and lowered guidance while AMD is a lost cause on many levels. So the best we can hope for from these two is that they stop going down at some point.
But I do believe in Semis – I do, I do – and if we all clap our hands and say it loud enough perhaps we can revive them before we are left with nothing but a sad pile of nano-sized fairy dust.
All the wonderful toys we get are all made out of mysterious little semiconducting do-hickeys (the technical term) and it is fairly inconceivable that our modern economy can actually function without them since I now need them to brush my teeth and shave and my car no longer works without them, nor does my camera, my phone or even our dog (well, he is a robot-dog…).
Semiconductors are not an obscure side-show to the GDP of the country, they are almost as important as oil although, unfortunately for the 14 losers in today's SOX index – nowhere near as scarce.
Now Intel has come up with a new "metal-gate" transistor that will take us to a whole new level of technology with 45 nanometer (ie. small) core that will fit 820 Million transistors on a quad-core model. This is, according to Intel, phase 1 and you ain't seen nothin' yet – which is an interesting thing to say since you really can't see any of the 820M transistors individually as they exceed the minimum resolution your eye is capable of processing.
The upshot of this is two big things happen – you get more processing power and it uses less battery power. If you can believe the hype, we may be looking at 12-24 hour laptop charges and very usable portable video phones but, like all great tech breakthroughs, we have no idea what kind of amazing applications will come about once this tech hits the streets.
"The implementation of high-k and metal gate materials marks the biggest change in transistor technology since the introduction of polysilicongate MOS transistors in the late 1960s" claims Gordon Moore, Intel co-founder attributed with coining "Moore's Law."
Intel's lithography roadmap no longer ends at P1268, the 32nm node. Earlier today Intel revealed its 22nm node, dubbed 1270, slated for first production in 2011. With factorial increases in processing power already on schedule for 2008 and 2011, I don't know what's going to happen in tech but I'll bet it's going to be, as they said in 2010: Space Odessey – "something wonderful."
