The semi-annual report shows that the business climate in the first half of 2010 is still up. According to the pre-increase of the three quarterly reports released by most companies, the quarterly earnings of enterprises in the third quarter are still growing at a quarter-on-quarter basis, indicating that the industry's economic climate in the third quarter continues to increase. This verifies the industry perspective that we have always emphasized.
We once again stressed that 2010 will be the starting point for prosperity of the global semiconductor industry, and technological innovation is the core driving force for this round of prosperity. This forms the logical basis for investment in the semiconductor industry in the next two years. Once again, we recommend that investors pay attention to long-term investment opportunities under the long-term prosperity of the industry.
Therefore, the semiconductor industry should enjoy a certain valuation premium based on the industry's continued upward trend and the preference of small-cap stocks in the market. Based on the current industry, the valuation of most companies in 2011 30X can still be maintained.
Industry perspective:
We understand from three aspects that the global semiconductor industry is still growing. This industry prosperity driven by technological innovation is bound to continue.
Inventory is still at historical lows. According to iSuppli's forecast, Q2 semi-annual surplus stocks in 2010 only increased by 3%, while in 2010 Q1 excess inventories were historically low, so the current excess inventory in the global semiconductor industry remains at a low level.
Global semiconductor capital expenditures are still at a low point: Mike Splinter, executive vice president of Applied Materials at the semiconductor equipment maker, points out that compared with past history, equipment costs for fabs are still relatively low this year. Look, the economy is in good condition in 2011 and there should be no oversupply.
Innovative products are constantly introduced. From LED TVs, 3D TVs, smart phones, to tablet PCs, consumer electronics product innovations continue to drive prosperity in the industry.
Need to express an opinion.
We cannot use the year-on-year growth rate of the 2010 industry quarter to judge whether the industry sentiment is down. Because the industry in the first two quarters of 2009 was the worst, and the third quarter and fourth quarter began to improve.
The base effect is bound to result in the fastest year-on-year increase in Q1 2010. We recommend using the 2007 quarterly data as a reference, so that the calculated growth rate fluctuations are not significant!
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