Semiconductors & Components
Miller Tabak + Co., LLC's Semiconductors & Components Technology research follows a food chain, or supply chain, approach to understanding the fundamentals of both the technology industry and stocks under coverage. Our focus is primarily on semiconductor and component companies that sell products into a wide variety of end markets such as industrial, automotive, PC's, cell phones and telecom equipment. Using our food chain approach to investing we monitor trends and demand higher up the food chain at the OEM level to understand how this impacts companies in the semiconductor market. We focus on factors that can change the fundamental outlook for the industry on a macro level and also on catalyst that may change individual company fundamentals on a micro level.
The semiconductor industry is inherently a very cyclical industry. Over the longer term the stock prices of semiconductor companies are mostly driven by this cyclicality. Individual company positioning and performance has a much smaller impact on stock prices over a given cycle. We feel it is important to be first and foremost overweight/underweight semiconductor stocks depending on this cyclicality. The stocks trend to have precipitous moves in unison with the cycle. In our food chain approach to the market we have developed three proprietary databases that we use extensively to get a handle on the larger macro picture for the industry and then adjust our recommendations accordingly.