01-26-2022, 10:52 PM
(01-26-2022, 05:00 PM)kblake Wrote: All those chip stocks that kept telling you there was a shortage is no longer the case.
The shortage is still very much an issue. ANYTHING in the semi-conductor space that is produced basically gets snagged up. The large majority of the components get snagged up, not when they come out of the production line, but several months and in some cases over a year in advance. In the electronic market the fight for even the tiniest components is still very much the thing. Prices are through the roof and delivery schedules are laughable.
Basically, anything the semi-conductor industry can produce is going to be sold, immediately, with pretty heavy price increases. The situation has calmed down a bit and will probably calm down a bit further, however I do not think it will be over any time soon.
The issue with semi-conductors was once again valuation. The companies sell 100% of their production immediately. Yet people were valuing them as if they will keep growing revenues +30% every year forever. Surprisingly enough, they can't sell more than they produce and it takes a long time to ramp up production, for those that want to take the risk of ramping up production at the top of the cycle.
Semi-conductor companies are still in an awesome position. The industry itself is as strong as ever.
People just were paying way too high multiples, and now we are returning to planet earth.