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When will IC recovery start?

Posted: 28 May 2009     Print Version  Bookmark and Share

Keywords:IC market  PC ODMs  iPhone  handsets in China 

The semiconductor market is slowly improving amid the downturn, but analysts disagree about the timing of the recovery.

IC Insights Inc. said that business is looking up in the second half of 2009, but investment banking firm FBR is not so sure.

Bill McClean, president of IC Insights, said that the semiconductor market has finally hit the bottom. ''We think the semi industry hit bottom in 1Q '09,'' he said. ''Our May Update, which will be released this week, includes a survey of 61 semiconductor companies, which, in total, expect 2Q09/1Q09 semi sales to increase at least 5 per cent. We expect the second half of the year to gain even more momentum. Our total 2009 forecast remains the same at minus 17 per cent.''

In a new report, FBR has a slightly different view. ''Not only does the current downturn look more like a protracted one ('U' shape instead of 'V' shape), we also believe that there are recent 'negative' data points that if were to sustain into the month of June, will most likely pressure 2Q/3Q build rates,'' according to FBR.

Based on checks in Taiwan, here's the data points:

1. Continued and broad-based increase in ''die bank" inventories from 4.5 to 5-plus weeks.

2. Recent downward adjustment by Apple to both new and existing iPhone build plans. ''Checks indicate that Apple recently cut back on the production of the new iPhone from an aggregate of 3.0 million to 2.5 million (30 lakh to 25 lakh) units, although it is still expected to be launched in late June; also we believe Apple has very recently lowered unit build forecast for the existing 3G iPhone by 15-20 per cent.''

3. Increased finished goods inventories of handsets in China. ''Data points also suggest some downside adjustments to handset unit build forecasts, while we also heard of inventory buildup in China for low-end brand products.''

4. Some PC ODMs lowering 2Q build plans since they no longer believe customers' rosy forecasts. ''There is increased 'noise' in the notebook segment; the 15-to-20 per cent notebook unit growth expectation for 2Q has indeed been lowered to 10-to-15 per cent.

''To our dismay, some of the downward adjustment has actually been for netbook. Additionally, all PC ODMs told us that the earliest solid state drive (SSD) would increase penetration is in 1H11.''

5. The word "shortage," in our view, used as a means to increase ASPs, and that it does not really imply lack of adequate supply.

-Mark LaPedus
EE Times

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