Woe, woe and thrice woe! The telecoms recovery is only just beginning but already a harbinger of doom is flapping around out there predicting another, and imminent, slump.
Fumiaki Sato, of Deutsche Securities and the man who gained massive publicity for himself and his company when he correctly forecast the bursting of the telecoms bubble by anticipating a collapse in demand for microchips, is at it again.
This time he is saying that a global lessening of demand for mobile phones and computers will kick-in over the second half of the year (which, of course begins in just over a week) at the same time as this year’s earlier ramp-up of the production of microprocessors and liquid crystal displays will flood the market, resulting in a glut that will force down prices and profits.
Mr.
Sato is also of the opinion that Moore’s Law, whereby the power of microprocessors effectively doubles every eighteen months to two years whilst the price of it halves, is beginning no longer to apply. (What eventually became known as Moore’s Law was propounded by Gordon Moore, the co-founder of Intel).
Sato says that the rate of increase in processing power is beginning to slow and when that trend becomes more evident, investors will desert microchip stocks in their droves.
Mr. Sato reckons this downturn will knock the Nasdaq, (which has been slowly clawing its way back to some kind of muted growth after years in the doldrums), back by a massive 20% and precipitate another recession.
All this will come as a surprise to the world’s telecoms equipment and handset manufacturers that, having just come through the worst slump in the sector’s long history, have forecast and built their revised business plans around much more modest but allegedly sustainable growth for the next three to five years.
Let’s hope they are right and he’s not
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