Tuesday, October 29, 2013

Seeking Alpha: GSI Technology May Be Cheap, But It's Not Easy

There is a big difference between "just cheap" and "cheap for a reason", and I have my doubts as to which bucket best describes GSI Technology (GSIT). While I do believe there is a solid argument to be made that GSI can regain share in the static random access memory (SRAM) market that it lost to Cypress (CY) on IP litigation worries, Cypress isn't throwing in the towel on this fight.

The bigger concern I have is about market growth. Over the last decade and a half, SRAM has transitioned from a large, high-growth market with numerous competitors to a slower-growing market with fewer players and a much greater reliance on networking/telecom equipment. I do believe that GSI's focus on higher-end products (and its longstanding relationship with Cisco (CSCO)) can drive share gains and better growth, but after the 20-plus years I've been researching chip stocks, I know better than to think that a chip company serving a market many believe to be in decline will have an easy time of it.

Read the full article here:
GSI Technology May Be Cheap, But It's Not Easy

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