Cramer on BloggingStocks: The chips aren't down

Posted Oct 16th 2009 9:40AM by Jim Cramer
Filed under: Intel (INTC), Market Matters, Cypress Semiconductor (CY), SanDisk Corp (SNDK), Cramer on BloggingStocks

From TheStreet.com Network

The Street.com's Jim Cramer says that it's too soon to think about selling the semis, the PCs, the components, the DRAMs.

When do we sell the semis? The DRAMS? The flash? When do we get out of the hard drives?

These are legit questions, but the people who are asking, "When do we sell Micron (NYSE: MU) (Cramer's Take), Western Digital (NYSE: WDC) (Cramer's Take) and SanDisk (NASDAQ: SNDK) (Cramer's Take)?" are the very people who told you never to own them.

That's the conundrum of this semi cycle and PC cycle. Just as we are finally hitting our stride and we realize that the semi cycle is alive and well again, AND NOT JUST RE-STOCKING, all over the papers, including the Wall Street Journal, we see reports crying, "When do we sell?"

I am of two minds on these stories. It is absolutely true that these are big cyclical commodity plays and pricing does peak. But it is also true that the commodity players have added very little new capacity, because they didn't believe either. They all thought the strength was re-stocking. But if you read the Intel (NASDAQ: INTC) (Cramer's Take) conference call transcript and you think they are being honest -- and I do -- you know we have just finished quarter one-and-a -half of actual build, not rebuild of inventories. And that is not enough to trigger massive capital expenditure on new equipment -- that is supposed to happen at the END of every cycle.

In other words, it is too soon and, alas, too cute. It is true that some of these stocks have run so much -- Western Digital -- that I don't want to own them. But it is also true that most haven't, when you look at longer-term charts.

How do we know it is early, besides Intel? How about the Linear Technology (NASDAQ: LLTC) (Cramer's Take) conference call, on which they said they are just beginning to consider new designs. That's the "buy Cadence (NASDAQ: CDNS) (Cramer's Take)" call, in case you are wondering.

How about the Xilinx (NASDAQ: XLNX) (Cramer's Take) interview I had last night, where the company was adamant about the strength of the mobile Internet tsunami?

I think selling these commodity plays is the wrong call. I think that buying a Cypress (NYSE: CY) (Cramer's Take) or an RF Micro (NASDAQ: RFMD) (Cramer's Take) or even a Micron or SanDisk is good, although I like the PLD biz of Xilinx more.

Most important, selling the components of PCs now, when the netbook is exploding in sales and China is ordering like mad, is too premature.

Hold on -- there is more coming.

Jim Cramer is co-founder and chairman of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer held no positions in the stocks mentioned.

Tags: cdns, cy, featured, jim cramer, JimCramer, lltc, mu, rfmd, wdc, xlnx

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Reader Comments (Page 1 of 1)

10-16-2009 @ 9:59AM

Arohan said...

Semis are always tough to play. I try to stick to the companies that have the most to gain. That is, they have been beaten down significantly but are now capitalizing on the upturn in the cycle with renewed orders. One of my favorites is Axcelis (ACLS) which is currently trading well below book.

Arohan
http://www.arohanvalue.com

10-16-2009 @ 8:21PM

Beltway Greg said...

Jim, I think you're about to get your butt handed to you and deservedly so. First, you have this big ole Apple love fest Apple to $267 and now you see a decline before AT & T reports. I think you better attend church and talk to a few local wicans before Monday p.m.

Here's the deal. $1.57/share
9 million IPhones.

Either that or practically every analyst in the galaxy has got it wrong which, considering the near-term past history is probable.

Get the phone, it's Jon Stewart.

10-17-2009 @ 12:34AM

Dennis Wallgren said...

Jim, Every so often you luck out and get one right, however I have learned if I do the opposite of what you say I am usually doing the right thing. This Market is a FAKE RALLY, you know it but you sold your soul to the OBAMA Socialists. Sorry just calling it as I see it, I really don't mean to offend you.