Semiconductors Not so simple

Chip stocks have been boiling. The sector has risen by 8% over the past two months, even including last week’s setback. But there are reasons to suspect that the momentum driving these stocks could soon falter. The bullish case is simple. Customers’ inventories appear low. Their personal computer-related chip inventories at the end of 2004 were at historic lows according to JP Morgan research. These customers will need to fill up at some point. Furthermore, chip makers are cutting their own sto...