Siliconix (SILI)

[WTMHouston]

Here is a current research note from CSFB regarding VSH, SILI's parent.

VISHAY INTERTECHNOLOGY, INC. (VSH: $25) 05/22/02
Highlights from Vishay (Siliconix) Plant Tour in CA
Annual EPS Prev. EPS
12/03E 1.80
12/02E 0.65
12/01A 0.89

Rating: BUY 12-Mo. Target: $36

Yesterday, we met w/plant mgr of Siliconix (80% owned by VSH and 20% of VSH's total revs), a maker of pwr & analog semi products for pwr mgnt and conversion applications.

Our visit gave further support to our investment thesis on VSH that due to the growing exposure to its highly value-added and higher-margin discrete semi biz (57% of 1Q02 total revs), VSH should be first amongst its peers to bounce off bottom & experience strongest GM expansion.

Key takeaways: 1) Seq Booking Trends Continue – We believe Siliconix (SILI-$33.23-NR) is continuing to experience seq improvement from 1Q02 based upon increasing booking trends throughout April & May, as well as expanding lead times (at 8-10 wks up from 7-8 wks in 1Q02). Also, mgmt indicated current orders being placed are fulfilling short-term forecasts rather than custs building inventory for future long-term consumption.

2) End Demand – End markets which continue to drive seq bookings improvement include consumer (29% of revs – i.e., Sony PS2 (SNE-$58.05-NR)), computers (28% - i.e., laptops) and auto (6%). Mgnt indicated wireless handsets (22% of revs) are beginning to experience improvement across all geogs.

3) Capacity Utilization – Capacity utilization is currently operating at 70-75% which, going forward, we believe could result in mitigating ASP decline (-3% seq in 1Q02) and improving gross margins (at 29% in 1Q02).

4) New Product Introduction – Siliconix is on pace to introduce 140 new products this year (up 8% from 130 new products introduced in 2001). Typically, new products introduced in last 2 years represent 25-30% of total revs. We reiterate our Buy rating on shares of Vishay.













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