Joe Osha Capacity Quotations

We've seen investment in capacity go up quite a bit and we had a scare this summer with wireless. So you can make a case that the business is in trouble. We try to focus on slightly longer-term fundamentals. The relationship between spending and revenue in this business is still reasonable. Visibility is still good. Pricing is good. Let's not forget, wireless handset demand is growing 50 percent over year-on-year. So with stocks down a bit and the fundamentals still solid, we though it was time to declare the mid-cycle correction over.

The semiconductor sector in general is in very good shape; the industry hasn't invested enough in capacity and that is actually very good for chip makers. Intel is often treated as a proxy for the chip sector, so the chip sector is doing well and so is Intel.

What we see happening is a bottoming to the rate of change in the semiconductor business, which has been negative and less capacity being added by the fourth quarter, which is also good. So, although companies themselves are still very conservative we think that the worst is past in terms of the downturn here.