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Tech Sector Sees a Reboot

June 10, 2009 08:00 PM
by Anne Szustek
Thanks in part to today’s tech-savvy youth, the electronics sector is powering forward.

Today’s Young Pups Enjoy Chips and Bits

Texas Instruments, Advanced Micro Devices and Intel were among the chip makers boosting the Philadelphia Semiconductor Sector Index yesterday, which went up 3.6 percent to 280.29. TI released a set of estimates predicting better overall profit and sales figures for the second quarter of this year.

Part of this is because in response to lower customer demand for electronics last year, companies cut back on their supplies of semiconductor chips; now, they need to buy more to maintain their reserves.

But sales of semiconductor chips—and the products that use them—are poised to rise for another, much longer-term reason. According to a report just released by industry research firm NPD Group, families in America that have children between the ages of 4 and 14 own an average of 11 electronic gadgets. Younger children are more likely to opt for electronic educational toys and young adolescents are after digital cameras and mobile phones. The study also shows that some 37 percent of American youngsters use personal digital music players, such as iPods, up from 6 percent in 2005.

Best Buy Spending Millions on New Stores

The NPD Group report also showed that while most children use televisions and computers, it appears that many families are upgrading to laptops and high-definition sets.
Such a trend would bode well for electronics retailer Best Buy. Even though its sales have been relatively slow over the past nine months or so, it’s opening 13 new stores during fiscal year 2010, each costing about $13 million, totaling out at approximately $179 million.

Electronics Help Bolster Asian Financial Markets

April orders for core machinery in Japan were down 5.4 percent from the previous month, despite Dow Jones estimates predicting a 0.8 percent uptick. However, there was a silver lining, Daiwa Securities SMBC analyst Yumi Nishimura tells The Wall Street Journal. The auto and electronics segments were performing well and helped keep up numbers. Taiwan and India’s stock markets also saw tech-backed bumps. Taiwan Semiconductor Manufacturing Company’s stock was up 3.7 percent on the back of a report from company chairman Morris Chang predicting a rebound to 2008 chip output levels in 2012, while shares of Tech Mahindra, the new owner of accounting fraud-wracked Indian computer company Satyam Computer Services, went up 5.5 percent, thanks at least in part to Satyam’s unexpected positive profit report.

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