News & Analysis
Comment
iniewski
Many companies that I know hire people on a contract basis only. This probably ...
Mahalowower
Whenever analysts get hyper, it really worries me. Looks like the semi market ...
Analyst: Chip market correction 'imminent'
Dylan McGrath
9/22/2010 12:56 AM EDT
SAN FRANCISCO—The business climate for the semiconductor industry is deteriorating, and leading indicators point to an imminent correction in the semiconductor market according to an analyst.
While the semiconductor sector has in 2010 enjoyed a dramatic rebound from a disastrous 2009, the party is nearly over, according to Robert Castellano, president of The Information Network, a high-tech market research firm.
Castellano predicted that a drop in sales of electronic gadgets would first impact the DRAM sector, which showed year-to-year sales growth of 135 percent in the second quarter. Castellano predicted that slowing PC sales would hurt microprocessor vendors Intel Corp. and Advanced Micro Devices Inc. and said semiconductor foundries would also feel the impact.
In recent weeks, several market research firms have revised upward their forecasts for semiconductor industry growth in 2010, with many now predicting the industry will see growth of better than 30 percent this year. But some chip firms, including Intel and AMD, have also lowered their sales targets due to slowing PC sales, and even the market research houses that raised their forecasts have predicted a slowdown in the second half of 2010.
Earlier this week, Vernon Essi, an analyst with Needham & Co. LLC, lowered estimates for several analog chip vendors. Both Exar Corp. and PMC-Sierra Inc. also lowered their sales targets this week, but some wireless chip vendors including Infineon Technologies AG and Skyworks Solutions Inc. have recently increased their outlooks.
According to Castellano, the "hyper-growth" shown by the semiconductor industry through the first half of this year cannot be sustained because the global macroeconomic climate cannot support semiconductor industry growth of greater than 50 percent. Castellano warned against forecasts for semiconductor and chip equipment industry growth that "seem to get bigger with each monthly announcement," saying "the fragile economies of the Western world do not warrant such growth."
Castellano predicted that a drop in semiconductor sales would also usher in a corresponding drop in sales for semiconductor equipment and materials. The front-end market will suffer pushouts and the lithography sector will be impacted most, Castellano predicted.
Castellano also drew parallels between 2010 and 2000, when he said poor inventory control, fear of IC shortages and concern over long waiting times for leading-edge equipment translated into a year that ended with $10 billion in excess IC capacity and a devastated chip equipment industry that never fully recovered until this year.
While the semiconductor sector has in 2010 enjoyed a dramatic rebound from a disastrous 2009, the party is nearly over, according to Robert Castellano, president of The Information Network, a high-tech market research firm.
Castellano predicted that a drop in sales of electronic gadgets would first impact the DRAM sector, which showed year-to-year sales growth of 135 percent in the second quarter. Castellano predicted that slowing PC sales would hurt microprocessor vendors Intel Corp. and Advanced Micro Devices Inc. and said semiconductor foundries would also feel the impact.
In recent weeks, several market research firms have revised upward their forecasts for semiconductor industry growth in 2010, with many now predicting the industry will see growth of better than 30 percent this year. But some chip firms, including Intel and AMD, have also lowered their sales targets due to slowing PC sales, and even the market research houses that raised their forecasts have predicted a slowdown in the second half of 2010.
Earlier this week, Vernon Essi, an analyst with Needham & Co. LLC, lowered estimates for several analog chip vendors. Both Exar Corp. and PMC-Sierra Inc. also lowered their sales targets this week, but some wireless chip vendors including Infineon Technologies AG and Skyworks Solutions Inc. have recently increased their outlooks.
According to Castellano, the "hyper-growth" shown by the semiconductor industry through the first half of this year cannot be sustained because the global macroeconomic climate cannot support semiconductor industry growth of greater than 50 percent. Castellano warned against forecasts for semiconductor and chip equipment industry growth that "seem to get bigger with each monthly announcement," saying "the fragile economies of the Western world do not warrant such growth."
Castellano predicted that a drop in semiconductor sales would also usher in a corresponding drop in sales for semiconductor equipment and materials. The front-end market will suffer pushouts and the lithography sector will be impacted most, Castellano predicted.
Castellano also drew parallels between 2010 and 2000, when he said poor inventory control, fear of IC shortages and concern over long waiting times for leading-edge equipment translated into a year that ended with $10 billion in excess IC capacity and a devastated chip equipment industry that never fully recovered until this year.
|
|
|
|
|
Navigate to related information
ronrun
9/22/2010 2:14 AM EDT
The stock price correction has already been priced in. Old news.
The greater question is: Can Intel survive without bribing and coercing computer manufacturers to exclude competition??
Sign in to Reply
daleste
9/22/2010 2:54 PM EDT
We are getting mixed messages in the media. Lead times increasing and capacity constraints while at the same time, the bottom is dropping out of the market. There is no way the economy can sustain greater than a 50% growth, but that doesn't mean to will drop to a negative. I think most of the problem is mix with some technologies having constrainst and other having an over supply.
Sign in to Reply
Baolt
9/23/2010 2:31 PM EDT
i dont think in no way semi market would see %50 percent growth. in most optimistic prediction we could see %33 grow at end of year, thank to rapidly growing clever mobile gadgets and pads. We expect several reveals till Q4 before hot market days. But thats all, nothing further can add more.
The growth was that fast, noone was ready, there were no healthy stocks, only big companies got what they wanted, many founderies went on allocation at following time, so little players suffered, suffering. Momently nobody is able to move or support demand at high ratio
At 2000s we had emerging markets strawing for computers,GSM sets boom at grown economies... now stiuation is different. Especially at US and EU people are not willing to buy many clever gadgets, neither auto market is promising. Global economic situation specifically unemployement ratios are still pain at back.
Sign in to Reply
DrQuine
9/25/2010 10:36 AM EDT
The "end" of the recession enabled consumers to start buying again (and new products like the iPad are tempting). Can these crazy percent growth and decline industry numbers be understood by stepping back and looking at a longer time window? Are we simply seeing a recovery from a sharp recession drop? I'd guess that a rational prediction for ongoing growth will be a much more sustainable number. I'd be interested to see a 5 year plot of the trends.
Sign in to Reply
Mahalowower
9/27/2010 3:10 AM EDT
Whenever analysts get hyper, it really worries me. Looks like the semi market will either keep growing - if you listened to the last three announcements/articles about 50%+ growth rates - or in this instance - an imminent correction. As @drquine said above, a slightly mid-term view (assuming we are incapable of long term view) might give a much better sense of in which direction the wind is blowing. Two data points make not a trend!
http://mahalowpower.com/
Sign in to Reply
iniewski
9/27/2010 2:21 PM EDT
Many companies that I know hire people on a contract basis only. This probably means they see growth now but are reluctant to increase staffing levels permanently feeling a drop in demand coming shortly...Kris
Sign in to Reply