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Shortages plague analogue vendors

Posted: 05 May 2010     Print Version  Bookmark and Share

Keywords:analogue market  shortage high demand  fab 

As part shortages and extended lead times plague analogue chipmakers, in some cases, vendors are turning away business because they cannot meet strong customer demand. Maxim, MPS, Power Integration and others are in that boat.

Earlier this year, analogue, memory, logic and other IC vendors began to see huge demand, prompting shortages for select parts and extended lead times.

There are still problems in the channels in analogue. "Stretched lead times have taken centre stage as the investment community tries to accurately forecast revenue based on many moving pieces: distribution sell-through, capacity constraint alleviation, 'turns' divination, backlog, delinquencies, etc.," said Vernon Essi, an analyst with Needham & Co. LLC, in a report.

Texas Instruments Inc. posted its results, which "beat consensus expectations for both revenue and EPS," Essi said. "Lead times (for TI) continued to improve and were generally about four weeks lower, now ranging in the 12-14 week time frame, down q-on-q from 16," he said.

But to meet future demand, TI is expanding its 300mm analogue fab . As reported, TI last year opened a 300mm analogue semiconductor fab in Richardson, Texas. TI's new analogue facility, dubbed RFAB, will be the first analogue chip fab to use 300mm wafers. TI had already moved to equip the fab by buying Rs.796.55 crore ($172.5 million) worth of chip production equipment from Qimonda AG's fab in Sandston, Va.

Maxim Integrated Products Inc. posted sales and EPS of Rs.2,350.41 crore ($509 million) and Rs.12.47 ($0.27) verses consensus of Rs.2,368.88 crore ($513 million) and Rs.12.47 ($0.27).

"No surprise that lead times are extended and Maxim, like its peers, is trying to boost capacity and manage a burgeoning backlog," Essi said.

"In order to address capacity constraints Maxim is taking multiple actions including: hiring fab operators to increase output from internal fabs, adding equipment at internal fabs to optimise existing production lines and increasing loading to foundry partner Epson," he said.

"This will free up Rs.230.89 crore to Rs.323.24 crore ($50-to-70 million) in incremental revenue generating capacity in September Q1 and again in December Q2," he said. "Management estimates that it left upwards of 10 per cent of revenue on the table in March Q3 and June Q4 (about Rs.235.50 crore ($51 million) and Rs.258.59 crore ($56 million)) as a result of not meeting its customer's orders."

Last week, fabless analogue vendor Monolithic Power Systems Inc. (MPWR) posted strong results. MPWR reported strong Q1 revenue and earnings and guided Q2 revenue 9 per cent above consensus

"Like most of its peers, MPWR's lead times are extended and it was unable to build channel inventory to a normalised level and did leave revenue opportunities on the table," Essi said. "Lead times have stretched to 8-12 weeks, twice the normal level of 4-6. Management believes there are no incidences of double ordering and scrubs it backlog for potential signs of this occurrence."

Another fabless vendor, Power Integrations Inc., posted its results last week. It reported Q1 revenue in line with expectations, but the firm missed the Rs.24.01 ($0.52) consensus EPS by Rs.1.39 ($0.03).

"Despite record bookings and new product developments investors will be focused on stretched lead times and an inability for distributors to build sufficient levels of inventory to serve the end customer needs," Essi said. "This constraint is due to having an inefficient mix of the appropriate parts that are needed as opposed to manufacturing constraints."

- Mark LaPedus
EE Times

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