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Five analysts and top management from eight sector firms examine the Semiconductor sector in this special 57-page issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info377.htm

TWST: What have you been telling investors about how they should interpret the flow of news surrounding the semiconductor industry, and the semiconductor stocks, over the last few months?

Mr. Veerappan: The flow of news is going to be conflicting, in the sense that you’re going to get some positive data points, you’re going to get some negative data points, and so the stock market consequently will be very volatile. That’s certainly something that I’m telling investors. Consequently, I’m telling them to pick their spots, identify franchise companies that they’re willing to own for the long term, and play those, while bearing in mind that, in the near term, the next three to six months or so, most of these stocks will remain in a trading range.

TWST: What are the encouraging signals that you’re getting from the stock market and the industry about these stocks?

Mr. Veerappan: The encouraging signal, if you can call it one, is the fact that most of the companies in my space, at least most of the good ones, have proactively reduced their revenue levels somewhere between 50% and 60% from their peak levels that were registered in the December quarter of 2000. We’ve seen a significant reduction in revenue levels for most of these companies, and at these reduced levels, it appears that cancellation and push-out activity is slowing considerably. Now, that is the only positive data point of significance that one can focus on.

TWST: What are the most disappointing data points?

Mr. Veerappan: That end market demand still appears to be anemic, and that we have not seen any significant signals as to when it will pick up. That’s the first significant disappointing piece of information. The second is that, while it is clear that inventories have peaked in terms of how high they can get, and that they are being worked down, which are positives, the fact remains that there still is a lot of inventory out there.

TWST: To what would you attribute the miscalculations about the amount of capacity that was going to be needed to meet the predicted demand for semiconductors?

Mr. Veerappan: In hindsight, it’s easy to say that there certainly was “irrational exuberance,” to use a popular phrase that Mr. Greenspan coined a few years ago, and we can look back and see that we were certainly building far in excess of projected demand in the hope and belief that the Internet phenomenon, if you will, would continue growing at triple-digit growth rates on a consistent basis. That simply hasn’t been the case, as we can tell from hindsight.

TWST: Are there any other companies that you’d like to highlight that could provide a real upside surprise for investors, maybe not in 2001, or even in 2002, but looking further out, when the economy, presumably, improves?

Mr. Veerappan: Sure. I think if you’re willing to look further out, I would focus a lot of attention on the wireless side of the arena, and we would focus on wireless infrastructure players. The two names that come to mind right away are, at the enterprise level, Intersil (Nasdaq:ISIL), and at the infrastructure level, Stanford Microdevices (Nasdaq:SMDI).

TWST: What distinguishes these companies?

Mr. Veerappan: Intersil owns the wireless LAN market, at this point in time, and is extremely well positioned to move beyond the wireless LAN market, in my view, to attack further portions of the wireless network.

This special issue includes:

1) Semiconductor - In an in-depth (5,500 words) Analyst Roundtable, Eric Chen, Senior Analyst at JPMorgan H and Q and Joseph A. Osha, top ranked Analyst responsible for covering the semiconductor industry at Merrill Lynch Global Securities, examine the outlook for the sector including, inventory levels, future outlook for smaller companies and share specific stock recommendations.

2) The TWST confidential Off-The-Record survey of management performance at twenty-three sector firms asked market insiders about the ability of management teams to create shareholder value.

3) Outlook for Semiconductors - In an in-depth (3,000 words) Analyst Interview, Dan Scovel, Semiconductor Analyst with Needham and Company, examines the outlook for the sector and shares specific stock recommendations.

4) Semiconductor Industry Overview - In an in-depth (2,000 words) Analyst Interview, Arun Veerappan, Managing Director at Robertson Stephens, examines the outlook for the sector and shares specific stock recommendations.

5) Semiconductor Stocks - In an in-depth (1,900 words) Analyst Interview, Jonathan Joseph, Managing Director at Salomon Smith Barney, examines the outlook for the sector and shares specific stock recommendations.

6) CEO interviews (average 2,500 words). Top management of eight sector firms examine the outlook for their firm and the sector.