Sector Watch: Semiconductor stocks

Still have a phone that only makes phone calls? That’s so 20th century; these days, the relic of a standard cell phone has been surpassed by devices that can do everything from record video to surf the Web to get directions to Manhattan. There are still some things these all-in-one devices can’t do, such as clean your house or walk your dog, but you never know: Silicon Motion Technology Corp. (Nasdaq:SIMO) and EXFO Electro-Optical Engineering (Nasdaq:EXFO) may be working on that, too.

Because of technology advances, different types of electronic devices now offer similar functionalities. Mobile phones for example, have become multimedia devices with integrated camera, video, music, e-mail, Internet and television. Most new personal computers have wireless connectivity, Internet and video phone and advanced video and audio capabilities.

Flash drives (self-contained devices using flash memory as their data storage medium) are one of the advances that enable these devices to be multi-functional  and are rapidly replacing floppy drives as the storage medium in electronic devices because of their smaller size, superior data storage capacity, ease of use, rewrite capability, speed and security. Gartner Dataquest estimates that the worldwide market for USB flash drives grew 66% annually to $1.7 billion in 2007 from $135.6 million in 2002.

Silicon Motion designs, manufactures and markets universally compatible, low-power semiconductors for the consumer electronics market. Its core business involves mobile storage devices, commonly known as controllers, used in flash memory cards, USB flash drives and card readers. The company’s products power mobile phones, digital cameras, personal digital assistants, car navigation systems, multimedia . . .

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