There is some logic to both being issues (too long or too short lead times) as the situations represent significant changes in trends and new challenges for management. The consequent increase in business risks for each company requires the analyst to call attention to the reliability of the financial forecasts. Basically, any time a company gets slapped too far off center, recovering their balance adds the risk they stumble or fall. Of course, it could just be wishy-washy CYA too!
I find the arguments, put forward by Danely, hard to comprehend. Xilinx being mostly a sole-source, should not be too bothered about double-ordering. Unless, it can keep the lead times below a certain threshold, beyond which, customers might find value in platform change. I absolutely don't agree with the correlation between pulled-in lead times and low demand. In times, where customers were struggling with time-to-market due to extended lead times, if companies, such as TI, come up with efforts to actually put the lead times within acceptable brackets, it does not reflect in any way on the demand. It actually augurs well in the long run as customer confidence is retained and it acts as a magnet for customers in growing economies where time to market is essential.
Xilinx makes unique parts; typically the parts are neither software compatible nor pin compatible with other competitor parts, so Xilinx's end-customers will need anywhere from 6 months or more to design in a different part. Moreover Xilinx's main competitor Altera has the same issue of extending Lead times, so it's not like end-customers can double order Xilinx with Altera. Thus the analyst's concern that Xilinx's extending Lead times puts it at risk of double ordering, is not convincing.
On the other side of the coin, shorter Lead times are bad if it is caused by end markets softening, resulting in lower demand. (But it's obviously a good thing if end markets are strong, and a company has been able to match capacity and production with customer and market demand).
In the case of TI, the issue is more complex. Though TI's end-market of Analog is growing, TI is still overweighted towards specific customers and products in its Wireless business unit, where market-share and end-demand is starting to flatten.
@John- I like the idea. I wish I'd thought of it. Very creative.
I nearly changed the title after I read your suggestion, but in the event that this column gets made into a movie I don't want to have to share the proceeds.
Apparently Mr. Danely is unaware of market share with "noting that one of his firm's rules for semiconductor investing is, simplistically, "Lead times coming in is bad.""
With standard component lead times at 26 weeks on many parts, and major improvement would justify changing vendors.
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