SAN FRANCISCO—Lead times for parts at the two firms that dominant the programmable logic market are shortening after being exaggerated by high demand for months. Analysts see the trend as a sign of slowing demand, though they appear divided on how severe the impact might be.
In reporting their quarterly results this week, Xilinx Inc. and Altera Corp.—which together account for some 85 percent of the programmable logic market—both reported improvement in lead times. Xilinx said average lead times were reduced during the quarter that closed Oct. 2 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 Wednesday (Oct. 20), executives took pains to describe a situation where lead times were shortening without chaos. Jon Olson, Xilinx' chief financial officer, did acknowledge that the company saw more order cancellations than usually during the quarter ended Oct. 2, he also said ongoing excessive lead times from some other chip vendors were causing some projects to be delayed.
"We believe we are experiencing stabilization in end market demand," said Moshe Gavrielov, Xilinx president and CEO. 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 (San Jose, Calif.)
turned in its fourth consecutive quarter of record revenue—$619.7 million—but sales fell short of consensus analyst expectations, which called for revenue of $626 million. The company also said it expect revenue for the current quarter to be flat to down 4 percent sequentially.
On Tuesday, Altera (San Jose,)
posted its third consecutive quarter of record sales—$527.5 million. Altera's third quarter sales beat analyst expectations, and the company said it expects further growth of 3 to 6 percent in the fourth quarter.
During the analyst call Tuesday, Altera CFO Ronald Pasek said the company's lead times improved during the third quarter 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, with the exception of 40- and 65-nanometer, which should recover to normal early next year," Pasek said.