Who dropped the ball this time around? Try Yahoo Japan and Centillium Communications Inc. Yahoo Japan is a big DSL provider in Japan, while Centillium is the main DSL-chip maker for Yahoo Japan.
Centillium of Fremont, Calif. has been "torpedoed" by Japan's DSL slowdown, chip yields, price problems, and bad research, according to an e-mail newsletter called DSL Prime.
Japan's DSL market, especially Yahoo, has been slowing for several months. Yahoo Japan has reportedly delayed some orders from its modem supplier, Ambit, according to DSL Prime.
"And there's some slowdown as people anticipate the faster service. Early this year, Japan was adding 400K and 500K per (subscribers per) month; September net adds were 347K, to 9.2M," according to the newsletter. "That's still enough for Japan to pass Korea for the highest number of DSL subscribers and leave the US in the dust."
Here's the problem: "Most Centillium sales are in Japan, so no one should have been surprised their quarter was weak and the announcement should not have driven the stock down 30%," according to the newsletter. "Centillium's Japanese customers are demanding the newest chips immediately, so competition can't leap ahead. While most companies are still testing ADSL2 and ADSL2+ into 2004, Japan deployed already. Yields at the beginning were predictably low, so Centillium had to pay for additional wafers to get enough good chips," the newsletter said.