News & Analysis
Comment
docdivakar
Mark, I frankly do not see a downturn coming, particularly in the wireless ...
yalanand
Many other companies are coming out with notebooks. For example Samsungs Galaxy ...
Is IC market going up or down?
Mark LaPedus
9/21/2010 6:42 PM EDT
SAN JOSE, Calif. - There are mixed signals in the IC market.
Recently, many market research houses have raised their respective IC growth forecasts for 2010. Some believe that the IC market will grow by a staggering 30 percent or more this year.
But right now, the PC, LCD, LED and other markets appear to be in a seasonal lull-if not slump. AMD, Intel and other PC chip makers have lowered their forecasts in recent times.
On Monday (Sept. 20), Vernon Essi, an analyst with Needham & Co. LLC, lowered his P/E ratio estimates for some analog vendors, including MPS, Maxim, SMSC, Volterra, TI, On Semi and Ixys. Then, on Tuesday (Sept. 21), Infineon, Skyworks and other wireless vendors raised their outlooks, but Exar and PMC-Sierra lowered thier respective forecasts.
What gives?
Clearly, some segments are doing better than others amid the lull. The wireline crowd is now suddenly seeing a slowdown. PMC-Sierra Inc. provided an update to its business outlook for the third quarter of 2010. The company now expects its net revenues in the third quarter ending Sept. 26, 2010, to be in the range of $161-to-$163 million. The company's previous outlook for third quarter net revenues announced during the July 22, 2010 earnings conference call was a revenue range of $169-to-$177 million.
''What makes this change particularly confounding is PMC clearly stated during its conference call that at the time of the call, all it needed was about 8 percent turns business to hit the midpoint of guidance,'' said Paul McWilliams, an analyst with Next Inning Technology Research. ''This implies the company had $160 million shipped prior to the conference call and scheduled already for shipment during the quarter. I have a hard time believing PMC turns business would be only $2 million from that point, so I suspect there were either some cancellations or schedule push-outs involved here. However, since this is the first full quarter for Adaptec's channel business, there could be some issues there too.''
Another wireline vendor, Exar Corp., announced a revision to its fiscal 2011 second quarter guidance. The company currently expects revenue for the fiscal second quarter to be between $36-to-$36.5 million. For the second quarter of fiscal 2011 ending Sept. 26, 2010, the company originally projected that net sales will be between $40-to-$42 million.
"Our business has softened in September due primarily to inventory corrections at both direct customers and distributors after five consecutive quarters of revenue recovery," said Pete Rodriguez, the company's president and chief executive, in a statement.
The wireless segment is more robust. ''Recent checks suggest Qualcomm calendar 3Q '10 is tracking robustly, with strength likely to continue into calendar 4Q '10,'' said Craig Berger, an analyst with FBR, in a report.
Other chip makers are seeing a mixed picture. ''Recent checks suggest Broadcom's 3Q revenues are tracking near the midpoint of its revenue guidance of $1.7–$1.8 billion (+6–12 percent QOQ), better than many peers,'' Berger said in a separate report.
''We hear of strength for 'combo' chips into smartphones and Apple products, set top box chips into Europe and Asia, and others like Ethernet networking chips and GPS chips into automobiles. We hear of weakness for Wi-Fi chips going into PCs (still) and consumer routers, and baseband chips,'' he said.
''For 4Q, we think Broadcom could guide revenues to grow 0–6 percent sequentially, towards a $1.8 billion revenue guidance midpoint (versus the Street's $1.76 billion), again better than most peers. 4Q positive contributors should include PC (Wi-Fi) and baseband revenues growing again as customer inventory de-stocking wanes, and some consumer related products (Apple, Blu-Ray, and DTV),'' he said.
''Indeed, recent checks suggest Apple will contribute $30 million of incremental revenue in 3Q and another $40 million of incremental revenue in 4Q, before seasonally declining in 1Q, aiding Broadcom's near-term revenues,'' he said. ''Also, Broadcom's recent production start checks reflect 5 percent sequential growth in 3Q starts, a modest 9 percent sequential decline in 4Q starts, and stability in start revisions, all suggesting the firm is seeing only limited near-term pressure on its order book.''
Recently, many market research houses have raised their respective IC growth forecasts for 2010. Some believe that the IC market will grow by a staggering 30 percent or more this year.
But right now, the PC, LCD, LED and other markets appear to be in a seasonal lull-if not slump. AMD, Intel and other PC chip makers have lowered their forecasts in recent times.
On Monday (Sept. 20), Vernon Essi, an analyst with Needham & Co. LLC, lowered his P/E ratio estimates for some analog vendors, including MPS, Maxim, SMSC, Volterra, TI, On Semi and Ixys. Then, on Tuesday (Sept. 21), Infineon, Skyworks and other wireless vendors raised their outlooks, but Exar and PMC-Sierra lowered thier respective forecasts.
What gives?
Clearly, some segments are doing better than others amid the lull. The wireline crowd is now suddenly seeing a slowdown. PMC-Sierra Inc. provided an update to its business outlook for the third quarter of 2010. The company now expects its net revenues in the third quarter ending Sept. 26, 2010, to be in the range of $161-to-$163 million. The company's previous outlook for third quarter net revenues announced during the July 22, 2010 earnings conference call was a revenue range of $169-to-$177 million.
''What makes this change particularly confounding is PMC clearly stated during its conference call that at the time of the call, all it needed was about 8 percent turns business to hit the midpoint of guidance,'' said Paul McWilliams, an analyst with Next Inning Technology Research. ''This implies the company had $160 million shipped prior to the conference call and scheduled already for shipment during the quarter. I have a hard time believing PMC turns business would be only $2 million from that point, so I suspect there were either some cancellations or schedule push-outs involved here. However, since this is the first full quarter for Adaptec's channel business, there could be some issues there too.''
Another wireline vendor, Exar Corp., announced a revision to its fiscal 2011 second quarter guidance. The company currently expects revenue for the fiscal second quarter to be between $36-to-$36.5 million. For the second quarter of fiscal 2011 ending Sept. 26, 2010, the company originally projected that net sales will be between $40-to-$42 million.
"Our business has softened in September due primarily to inventory corrections at both direct customers and distributors after five consecutive quarters of revenue recovery," said Pete Rodriguez, the company's president and chief executive, in a statement.
The wireless segment is more robust. ''Recent checks suggest Qualcomm calendar 3Q '10 is tracking robustly, with strength likely to continue into calendar 4Q '10,'' said Craig Berger, an analyst with FBR, in a report.
Other chip makers are seeing a mixed picture. ''Recent checks suggest Broadcom's 3Q revenues are tracking near the midpoint of its revenue guidance of $1.7–$1.8 billion (+6–12 percent QOQ), better than many peers,'' Berger said in a separate report.
''We hear of strength for 'combo' chips into smartphones and Apple products, set top box chips into Europe and Asia, and others like Ethernet networking chips and GPS chips into automobiles. We hear of weakness for Wi-Fi chips going into PCs (still) and consumer routers, and baseband chips,'' he said.
''For 4Q, we think Broadcom could guide revenues to grow 0–6 percent sequentially, towards a $1.8 billion revenue guidance midpoint (versus the Street's $1.76 billion), again better than most peers. 4Q positive contributors should include PC (Wi-Fi) and baseband revenues growing again as customer inventory de-stocking wanes, and some consumer related products (Apple, Blu-Ray, and DTV),'' he said.
''Indeed, recent checks suggest Apple will contribute $30 million of incremental revenue in 3Q and another $40 million of incremental revenue in 4Q, before seasonally declining in 1Q, aiding Broadcom's near-term revenues,'' he said. ''Also, Broadcom's recent production start checks reflect 5 percent sequential growth in 3Q starts, a modest 9 percent sequential decline in 4Q starts, and stability in start revisions, all suggesting the firm is seeing only limited near-term pressure on its order book.''
|
|
|
|
|
Navigate to related information
Dave.Dykstra
9/21/2010 11:42 PM EDT
Very interesting! Of course, with the current state of the economy and the current state of technology, it should not be surprising that some segments of the industry would be doing well while others are in a lull. Based on the past couple of years, being in a lull may not even be a particularly bad thing, since at least that's not a precipitous drop. It will be fascinating to watch how this goes this fall.
Sign in to Reply
GREAT-Terry
9/22/2010 12:41 AM EDT
It is good to see overall market may not be very bad. BTW, I still have strong on the Apple as it really revolves the whole consumer market behavior.
Sign in to Reply
mark.lapedus
9/23/2010 2:13 PM EDT
Does anyone see a downturn coming?
Sign in to Reply
Baolt
9/23/2010 3:21 PM EDT
Let say not downturn, before Q2-11 its hardly can become reality but recession is the case momently. Allocations and late fab tool support made customers, market more careful less happy. Growth limit for semi market is set. Nothing more, yet if pads and clever hand sets would make a suprise at Xmas season we could see still record
Sign in to Reply
yalanand
9/25/2010 2:04 AM EDT
Many other companies are coming out with notebooks. For example Samsungs Galaxy notebooks reviews are pretty good. Will this affect Apples profit needs to seen.
Sign in to Reply
docdivakar
10/1/2010 2:34 AM EDT
Mark, I frankly do not see a downturn coming, particularly in the wireless sector. A major portion of the growth in this area comes from developing economies and needless to say, there is no slowdown there!
There may be an easing of demand in the wired sector of chip components but this sector is poised for more growth in the coming years. The Ethernet market cited in the article: only now the 10Gig base-T PHY chips are being released with manageable power requirements (they still have ways to go) that is making their adoption easier.
Just last week we witnessed the acquisition of Teranetics by PLX Tech. Certainly the management guys at the latter saw something other than the slowdown? ;-)
Dr. MP Divakar
Sign in to Reply