Three posts to come…

I mentioned in a post on Recent market Action in late May that the tech industry had been a laggard during the current market rise.  I said that the IT index is a mix of large-cap companies that have little growth in prospect and some smaller, more exciting names.  I’d like to elaborate on that post.  I’m going to do this in three parts:  hardware, business software and games.

Hardware:  prohibitive cost of chip production

Take hardware first.  To build a new state-of-the-art semiconductor fabrication plant from scratch costs at least $3 billion.  Two or three companies are unlikely to band together to share the expense, for fear that their design and process technology secrets would be stolen by the others if they were to operate in a single plant (Intel told me once that they won’t sell an obsolete fab to anyone, but dismantle it and sell the components piece by piece instead, for security reasons).

Getting the capital to built a new plant is a huge hurdle for almost anyone except Intel.  But that’s not the only stumbling block.

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