Can Silicon be Sexy Again?

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Palo Alto, Silicon Valley – You didn’t have to know the Nasdaq had fallen for the fifth consecutive day yesterday to understand that some of America’s most respected investors have gone cool on the technology that gave Silicon Valley its name.

“Moore’s Law can be your best friend and it can kill you” said Morgan Stanley’s top investor, Mark Edelstone, at last night’s 10^th Annual Semiconductor Forecast event, explaining that the pace of innovation in processor power means it’s getting tougher than ever for innovators to retain leadership positions in the face of cheaper, copy-cat Asian businesses.

“I’m not interested in ‘hot’ stocks,” echoed super-investor Dan Niles, “it’s about volume for me” suggesting he’d rather back a diversified semiconductor business with interests in the 200 million cell phones or 10 million LCD TVs sold each year, than the inventors of the ‘next big thing’ if it was only going to sell a few million units.

Okay, so it’s not exactly a revelation for investors to favor ‘total market potential’ over a hot widget but the growing dependency of chip makers on consumer technologies – and therefore their need to understand, associate and behave in synch with the manufacturers of those products- is relatively dramatic for an industry considerably more familiar with EE Times than E!.

The good news for agencies like ours is that the shift these companies are trying to affect presents tremendous opportunities for PR professionals able to demonstrate the links between this mind-bogglingly complex industry and the products and trends showcased at, for example, CES each year.

All of which (plus the fact that the semiconductor industry is still a $250bn industry growing at 3X the growth rate of global GDP) leads me to deduce we’ll see semiconductor companies beating down the door of PR and marketing firms for years to come, even if investors aren’t beating down theirs in Silicon Valley.