Making Money in Technology
After the Bubble, page 19
Semiconductor and Semiconductor Equipment
When semiconductor companies such as Cypress Semiconductor note, as Cypress did recently, that they have
not had a single order in the last month, it is not good news. Still, it is important to categorize
semiconductor companies by their sales chain: who is the end customer?
Companies that are ultimately dependent on the PC are in a very different situation than companies that
sell expensive equipment to telecommunications companies.
In addition, it’s obvious that if semiconductor manufacturers are hurting, they, in turn, must cut their
budgets for capital expenditures. The worst of the news is not in yet for semiconductor equipment vendors
such as Applied Materials (NASDAQ: AMAT), KLA Tencor (NASDAQ: KLAC), and Novellus (NASDAQ: NVLS).
Photonics
Photonics—the transmission of information using light waves and fiber optics—is an exciting area.
This technology has transformed long-haul communications networks and is undoubtedly important to the future.
Core vendors such as Ciena (NASDAQ: CIEN) and Corvis (NASDAQ: CORV), component manufacturers such as Avanex
(NASDAQ: AVNX), Bookham (NASDAQ: BKHM), and LightPath (NASDAQ: LPTH), and metropolitan providers such as Oni
Systems will survive—and are long-term bargains at the right price.
On the start-ups front, close to four hundred early stage Photonics ventures were funded in 2000.
This means that multiple companies were funded in each given niche. Not all will survive. Those that are
acquired or merge with their peers stand a chance.
While funding a Photonics start-up is expensive—these companies require both hardware and software
development efforts—this is one area that still receives early-stage funding.
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