Most of our stocks went down a bit last week, and that's probably down as much to events in Libya, Japan and the periphery of Europe as anything else. But within those falls, ARM and NVIDIA continued their plunge of recent weeks and were joined by Qualcomm.
The thing these three companies have in common, of course, is mobile chips, so it's fair to infer that investors cooled on mobile chips last week. Once more there were no specific events to explain these falls, so we figure they're indicative of the continued deflation of a speculative mobile bubble that was catalysed by the hype around Android Honeycomb tablets at the start of the year.
ARM designs many of the chips found in mobile devices, while NVIDIA's Tegra 2 chip is the default for Honeycomb tablets and Qualcomm is the mobile chip market leader. There were many analyst reports at the start of the year predicting above-expectation growth for the tablet market, and pretty much all mobile and PC OEMs were resolved to enter the market, having onserved the popularity of Apple's iPad.
But this speculative euphoria soon subsided as feats of a ‘tablet glut', in which over-optimism led to too many components being manufactured, grew. This fear became especially strong after Apple launched the iPad 2, despite it not delivering anything too surprising.
To us, the over-reaction to the launch of the iPad 2 is symptomatic of a speculative bubble. There was probably an underlying feeling that some stocks, such as ARM and NVIDIA, were overvalued, but as with all bubbles, nobody wanted to miss out on the action. The iPad 2 has been a splash of cold water in the face of the more hysterical speculators, and mobile component shares have fallen accordingly.
|Company||Listing||Share price 21/2/11||Share price 28/2/11||Share price 7/3/11||Share price 14/3/11||7-day change||Market cap (bn)|