Professional IC Market

Analysts, execs, EE Times weigh in on IC forecasts 2010/3/26 14:55:00

 

The Semiconductor Industry Association and World Semiconductor Trade Statistics association both issued revised forecasts this week calling for 2009 chip revenue to drop more than 21 percent. Both had last issued forecasts in November calling for a mid-single-digit decline. But the world and the chip industry are both very different than they were in November.

EE Times sampled a variety of recent opinions on the forecasts and the outlook for the year from industry analysts, our own editors and one industry executive. Here are the results:

Jim Feldhan, president, Semico Research Corp.

''April chip sales were surprisingly strong. Since the semiconductor industry traditionally runs on a quarterly cycle, with the last month of the calendar quarter experiencing a surge in sales, the first month of a new quarter usually shows a significant drop. April chip sales since 1996 have been down between 17.2 and 34.8 percent compared to March. This year, April sales were down only 7.6 percent compared to March.

First quarter 2009 results were right on target with our expectations. April was surprisingly strong. Compared to January 2009, April's sales are 21.3 percent higher. This is consistent with our assumption that companies overreacted and now need to plan for the second and third quarters.

 

Despite the overall market softness, we see a number of strong markets that will maintain industry unit demand. These markets include Netbooks, GPS systems and HDTV as a few examples."

Current 2009 IC forecast: Minus 12-13 percent.

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Mark LaPedus, semiconductor editor, EE Times

 

''I still see a lot of mixed signals. Most of them lead me to remain pessimistic. PC and cell phone sales are improving, but automotive remains terrible. I see a slight back-to-school PC surge, but IT spending remains lousy.

 

The real estate market is coming back to life, but housing starts remain sluggish. Housing starts are a key indicator of consumer confidence and chip demand. One indicator: Toll Brothers Inc., the leading builder of luxury homes in the U.S., said that second-quarter revenues were $398.3 million (648 housing starts or units). It had a backlog of $944.3 million (1,581 housing starts or units), and net signed contracts of $298.3 million (582 housing starts or units). This is down 51 percent, 55 percent and 40 percent, respectively, in dollars, and 47 percent, 48 percent and 37 percent, respectively, in units, compared to FY 2008's second-quarter results. Toll did not provide a Q3 forecast.

 

There is some good news: Cowen and Co. LLC this week raised its forecast for fast food giant McDonald's. But I'm afraid the second-half demand for semiconductors will be much like eating a Big Mac: There will be plenty of empty calories and an unsatisfied feeling at the end.''

2009 IC forecast: Minus 25 percent.

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Bryan Lewis, analyst, Gartner Inc.

"We expect 4.9 percent sequential growth in second-quarter semiconductor sales, based on recent semiconductor company guidance, and this positive movement has caused us to move away from our first quarter of 2009 worst-case scenario of a record down year in 2009. While this is positive news, the semiconductor industry is clearly not out of the woods, as there is minimal evidence that demand is returning, except in China."

 

Current 2009 IC forecast: Minus 22.4 percent. This new outlook is slightly better than the first quarter projections, when it said chip revenue would decline 24.1 percent in 2009.

 

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Bill McClean, president, IC Insights Inc.

 

''While other analysts spent 1Q09 telling everybody how bad things were, and that there was no recovery in sight, IC Insights has, since December of 2008, continued to emphasize to its clients the importance of keeping a quarterly perspective on the IC market this year and to focus on the upcoming quarterly rebound that would take place in 2009. The ongoing surge in the 2Q09 IC market reinforces IC Insights' outlook that the bottom was reached in 1Q09 and that the IC industry is in the early stages of its recovery."

 

Current 2009 IC forecast: Minus 17 percent.

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Dylan McGrath, West Coast online editor, EE Times

 

''It's hard to say with a straight face that market contraction of 21 percent is good news. But how about a glass-half-full viewpoint? We've known for months that 2009 was going to be a horrible year for the chip business. In recent weeks we've seen executives and analysts saying that the worst is behind us, and the projected market decline looks more and more like it will be better than the nearly 30 percent that some predicted.''

 

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Shut down Taiwan

Risto Puhakka, president, VLSI Research Inc.

 

''This equipment downturn was a result of excessive investment in memory manufacturing capacity especially in Taiwan. The world would be well served if all of Taiwan's memory manufacturing would shut down today. The remaining memory suppliers are easily able to provide the needed memories, but they need better and more profitable pricing. That then would enable them to invest in technology and equipment in 5X, 4X and 3X nodes and would bring capex back to reasonable levels.''

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Robert Van Buskirk, president of the Multi-Market Products Group, RF Micro Devices Inc.

 

In December and early January, RF Micro's fab utilization rates were at a low point and were about 25 percent. At present, the company's fab utilization rates are "hovering around historical norms at 75 percent or above. Relative to our June quarter, things are getting better. We knew (business) would come back."

 

Regarding the outlook, RF Micro has not made any forward statements, although he said that "visibility is reasonably limited."