Global Sources
EE Times-India
Stay in touch with EE Times India
 
EE Times-India > Embedded
 
 
Embedded  

Analyst: Shortening lead times could spell trouble

Posted: 26 Oct 2010     Print Version  Bookmark and Share

Keywords:programmable logic  PL  market analysis  lead time 

Xilinx Inc. and Altera Corp.'s results for Q3 2010 account for about 85 per cent of the programmable logic (PL) market. Both companies reported improvement in lead times, which have been exaggerated by high demand for months. Analysts warn that the trends to shorter lead times may be a sign of slowing demand, but they are divided about how severe the impact might be.

Xilinx said average lead times were reduced during the quarter from 12 weeks to nine weeks, and that the firm expects average lead times to return to their historical normal of about four weeks by the end of the year.

Altera said its lead times have declined to 24 weeks at the high end from a peak of 26 weeks and are expected to decline to a normal range of two to eight weeks by early next year.

During a conference call following Xilinx' quarterly report, executives were careful to describe a situation where lead times were shortening without chaos. Jon Olson, chief financial officer, Xilinx, acknowledged that the company saw more order cancellations than usual during Q3 2010. He also said ongoing excessive lead times from some other chip vendors were causing some projects to be delayed.

"We believe we are experiencing stabilisation in end market demand," said Moshe Gavrielov, president and CEO, Xilinx. While the company expects average lead times to continue to decline, Gavrielov emphasized that demand for Virtex-6 and Spartan-6, Xilinx' newest products, remains strong.

Xilinx reported record revenue for the fourth consecutive quarter of Rs.2,893.75 crore ($619.7 million), but sales fell short of consensus analyst expectations, which called for revenue of Rs.2,923.17 crore ($626 million).

On the other hand, Altera beat analyst expectations by reporting its third consecutive quarter of record sales at Rs.2,463.22 crore ($527.5 million). The company said it expects further growth of 3 to 6 per cent in Q4 2010.

During Altera's conference call, Ronald Pasek, chief finance officer, Altera, said the company's lead times improved during Q3 2010 partly because its foundry supplier, Taiwan Semiconductor Manufacturing Co., had more capacity available. "We do not expect lead times for most products to completely return to normal until late in Q4 2010, with the exception of 40- and 65nm, which should recover to normal early next year," Pasek said.

Analysts' reading
Ian Ing, an analyst with Gleacher & Co. noted that Altera's Q4 2010 revenue guidance exceeded both his firm's and consensus Wall Street expectations. Ing attributed the better-than-expected guidance to lead times for most products remaining extended despite capacity constraints improving throughout Q3 2010. Ing said the delay in shortening lead times would postpone a likely decline in customer orders through Q4 2010 and some of Q1 2011.


1 • 2 Next Page Last Page



Comment on "Analyst: Shortening lead times could..."
Comments:  
*  You can enter [0] more charecters.
*Verify code:
 
 
Webinars

Seminars

Visit Asia Webinars to learn about the latest in technology and get practical design tips.

 

Go to top             Connect on Facebook      Follow us on Twitter      Follow us on Orkut

 
Back to Top