Customer demand in many product sectors is strong. This is good news for many semiconductor companies that have been limping along with negative cash flows and shrinking balance sheets. The growing demand also has the potential to drive up ASP's as well as unit volumes. At the same time, the growing product demand is putting strains on foundry and OSAT capacity, particularly in higher tech products. Capacity is being added by many manufacturing partners, but equipment lead times are long. Many companies are beginning to commit to hiring that they have had on hold for more than a year. There is certainly the temptation to start double ordering and reckless hiring.
There are those that still fear there may be a slowdown in the second half of the year. Taking a philosophical view, a little speed bump might not be such a bad thing to keep us from getting too exuberant and doing some of the things we do in every upturn that look so dumb when we look back after the crash. We always say we're going to get smarter every time we go through a boom/bust cycle. Maybe the clinging conservatism we see this time might actually help us achieve our dream of getting smarter. Only time will tell.
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