Five Semis That Will Survive This Downturn

Among the companies that we looked at in the prior article, many can be eliminated with ease. So, let’s get the job done systematically.

1. Applied Materials (AMAT). With pristine financials and the enviable position as the #1 purveyor of machines that the semiconductor industry needs to make their chips, Applied flies through the initial screen.
2. nVidia (NVDA). With little debt, and already having survived a bush with bankruptcy, nVidia is flush with over a billion in cash, and a winning portfolio of graphics chips and cards. nVidia gets through the initial screen too.
3. Silicon Storage Technologies (SSTI). This one is a little harder. This manufacturer of NOR flash is extremely tight fisted [and I like that]. Their off-balance sheet assets easily exceed the company’s current market value. Add to this, a steady stream of royalties [$30 to $40 million per year], SSTI squeaks through the initial screen.
4. SanDisk (SNDK)- I have this eerie feeling that this is the only memory chip maker with the possible chance of making it to the final five.
5. Lam Research (LRCX) - has done well in the last few years, and has decent financials, but they are looking at a very difficult years ahead of it. Lam does not make it through the initial screen.
6. Novellus (NVLS) - similar to Lam.
7. Kyocera (KYO) - this maker of ceramic packages for chips is flush with cash, and has survived Japan’s nuclear winter through the last two decades. They sure need a break.
8. Intel (INTC) - the #1 chipmaker is still profitable. I am sure it will make the top five,
9. Texas Instruments (TXI) - has a chance.
10. Linear Tech (LLTC) - with gross margins in excess of 70% and a current yield of over 3.5%, Linear is sure of making it to the top five.
11. Maxim (MXIM) - with a current yield of 6.5%, a billion in cash and no debt, and gross margins close to 60%, maximum gets through round one with ease.
12. Marvell (MRVL) - This one gets a reject due to corporate governance issues.
13. Broadcom (BRCM) - yes! These guys easily make it through round #1.
14. Altera (ALTR) - with gross margins in excess of 60% and a history of profitability, ALTR makes it through round #1 with ease.
15. Xilinx (XLNX) - numbers are similar to Altera’s and with excellent products and software
16. Lattice Semi (LSCC) - CUT.
17. Actel (ACTL) - CUT again.
18. Micron (MU) - CUT. No need to explain things here.

So, let’s see. The survivors are: