Thursday, April 02, 2009

Signs of Improvement in Tech

Based on both my last trip to Asia and what I am hearing on the street in Silicon Valley, there are signs of economic improvement in tech.

The basic view is that everyone turned off manufacturing from Dec-Feb in a panic and bled down inventories. Well, all inventories are now bled dry and manufacturing has to be restarted. So right now the tech supply chain is starting to re-fill, with utilization capacities up and sales noticeably up at the front end of the chain.

CapEx is still down, however, and will be the last to recover. I think what is going to happen is that capacity will attempted to be filled with present infrastructure, and companies will see if the "new equilibrium" of capacity to sales is now in match. It won't be until later when there are definite signs of demand outstripping supply that there will be Cap Ex increases.

So bottom line is that companies that sell components are starting to see a recovery while companies that sell cap-ex are still waiting in the wings.

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