Semiconductor business hits sudden downturn
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ANALYSTS AT Gartner Dataquest said that while overall 2004 brought a 23 per cent increase in revenue amounting to $218 billion, the semiconductor business slumped during the second half of the year.
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(InfoWorld) - News coming out the chip sector has been great so far this week, but analysts warn that economic woes such as the housing mess might still spoil the party. The consensus among analysts appears to be that corporate and personal spending on technology products will be hurt by the housing issues in the U.S., but nobody knows how bad the impact will be, according to Peter Sutton, head of research at CLSA Asia-Pacific Markets in Taipei. Demand for technology products, especially computers and mobile phones, in the rest of the world is going strong, he said, but even that demand could pull back in the event of a U.S. slowdown because many developing countries depend on exports to the U.S. for income. By the end of this year, people should know how bad the loan and home foreclosure situation will be, according to Sutton. The housing market in the U.S., he said, is expected to bottom in the first quarter of next year. The fear is that the housing issues could hurt consumer spending at some point later this year, but so far the technology industry isn't showing any signs of trouble. The flow of good news started in Asia on Monday with the world's largest contract chip maker, Taiwan Semiconductor Manufacturing Co. (TSMC), reporting record high sales in August and revising up its third quarter financial guidance. The company, considered a bellwether for the overall tech industry because of the variety of gadgets it makes chips for, said consolidated sales in August rose 10 percent year-over-year to NT$30.02 billion (US$907.0 million), beating its previous record of NT$27.96 billion from July of last year. TSMC also predicted its third quarter revenue will likely hit between NT$87 billion to NT$89 billion, higher than a previous forecast of NT$85 billion to NT$87 billion, and said its gross margin would come out at the top end of expectations. Some customers asked TSMC to ship some chips earlier than expected, a spokesman for the company said, but the company won't comment on how that might impact the fourth quarter. Taiwanese chip designer MediaTek followed up TSMC's news, announcing an agreement to buy certain telecommunications chips products from Analog Devices Inc., of Norwood, Massachusetts, for US$350 million in cash. The deal itself isn't huge, but merger and acquisition activity normally takes place when companies see bright prospects for the future, and MediaTek is looking to use the acquisition as part of its mobile phone chip strategy. Among the products the company acquired is a chipset used in TD-SCDMA (Time Division-Synchronous Code Division Multiple Access) basebands and radio receiver products, which will help it increase its presence in its main market, China. TD-SCDMA is the 3G (third-generation) telecommunications standard being pursued in China. Positive corporate news for chip makers didn't stop in Asia. As the work day opened in the U.S., technology industry watchers were treated to theÂ long-awaited launch of Barcelona, the new quad-core processors from Advanced Micro Devices. The Sunnyvale, California company announced a number of companies are already using the chips, including IBM, Sun Microsystems, Dell, and Gateway. The world's largest chip maker capped Monday with the biggest news of the day.Â Intel raised its third quarter revenue forecastÂ to between US$9.4 billion and US$9.8 billion from a previous range of US$9.0 billion and US$9.6 billion, and said its gross margin would be at the upper end of guidance due to stronger than expected global demand for computing products. Despite the strong chip news and outlook for the current quarter, which ends Sept. 30, the future remains uncertain. "Near term data shows little evidence of order cutbacks in the tech supply chain," said Warren Lau, chip analyst at Macquarie Research Equities. "But having said that, the question remains: will the sky come crashing down because of the meltdown in the U.S. subprime markets?"
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LONDON, November 9  - The German semiconductor company, Infineon Technologies (IFX.ETR), has projected a downturn in the semiconductor industry next year, after reporting a 10% y/y decline in its profits for the fourth fiscal quarter.
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For China, it could reinvigorate a chip industry that has slowed over the past few years as major chip makers posted a string of money-losing quarters. It also represents a token of goodwill by Taiwan to political enemy China.
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Japan's industrial output fell unexpectedly in May, hit by falling production of electronic and IT products.
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Infineon Technologies AG, the German maker of semiconductors, said Thursday that a downturn at its Qimonda computer memory chip subsidiary pushed it to a loss in the first quarter of its fiscal year as chip prices fell.
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The chipmaker gets another downgrade on Friday.
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Korean LCD maker suffers massive decline in earnings.
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Shares in chipmaker Texas Instruments fall after its revenue projections are hit by higher competition.
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Semiconductor Manufacturing International Corp. (SMIC), China's largest chip maker, reported a small profit for the final quarter of 2006 as the sale of property helped put the company back into the black afterÂ heavy third-quarter losses.
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(InfoWorld) - Advanced Micro Devices' move to cut overhead costs by outsourcing its chip manufacturing business may backfire in the long run, according to several analysts who have downgraded the company's stock. AMD is struggling it keep its head above water after posting losses of $611 million and $574 million for its past two quarters. The company has also drawn criticism for its manufacturing, with recent reports that it will delay the full-volume launch of the "Barcelona" quad-core Opteron server chip from July to October. That would hobble AMD in its effort to compete with surging rival Intel. Although AMD's Opteron has won over many users of Intel's Xeon server chips since its launch in 2003, that trend is now in a sharp reversal, according to a June 13 report from Jon Peddie Research. In the market for workstation processors, AMD had pushed Intel's share down to 87.6 percent in the first quarter of 2006, but Intel has rebounded since then, reaching 92 percent share in the first quarter of 2007. The building pressure recently prompted some analysts to predict that AMD might stop manufacturing any chips at all and convert to a fully outsourced business model as soon as 2008. AMD said that rumor had come from a "speculative" Goldman Sachs report, but confirmed that the company is trying to focus its efforts on developing chips instead of manufacturing them, according to AMD spokesman Drew Prarie. AMD currently has a deal giving it access to IBM's chip fabrication plant in East Fishkill, New York. Under that arrangement, AMD can perform much of its research and development without having to incur the cost of owning its own manufacturing plant, he said. "We're looking to find ways to extend that model beyond research and development to the full range of the manufacturing supply chain," Prarie said Monday. "That could run the range from increasing the amount of processors we send out for chartered manufacturing, and could also include things like establishing partnerships on the manufacturing side." AMD has already taken some steps in this direction. In 2006, AMD announced a plan to give Chartered Semiconductor Manufacturing a heavier load, asking the firm to begin making the new 65-nanometer scale Athlon chips and other processors. And in May, AMD announced that it hadÂ awarded the job of manufacturing its newest graphics chips to Taiwan Semiconductor Manufacturing Company (TSMC). Now the company may be preparing to expand that model, according to a June 17 report from Citigroup analyst Glen Yeung. AMD is on the verge of making a "transformational move" such as outsourcing a larger share of low-end processors to TSMC, selling a share of the manufacturing capacity in its Fab 30 chip-making plant in Dresden, Germany, or even selling a share in its planned $3.2 billion chip plant in Saratoga County, New York, Yeung wrote. Despite AMD's insistence that such an arrangement would simply allow it to stay in the chip business while cutting costs, the uncertainty makes Wall Street analysts nervous. The Citigroup report lowered its estimate of AMD's future revenue from $1.3 billion to $1.1 billion for the second quarter, and from $5.8 billion to $5.6 billion for the full year of 2007. Those figures would represent a flat performance compared to AMD's performance last year, with $1.22 billion of revenue in the second quarter of 2006 and $5.6 billion for the full year. "We are again lowering AMD estimates, this time for 2Q07 (we had previously lowered 2H07), reflecting our field checks suggesting current conditions are weak," Yeung wrote. While Citigroup recognizes that AMD could be moving away from its own manufacturing and that could help the company cut costs, "we remain on hold for the shares given near-term weakness," he wrote. In contrast, Yeung said Intel would continue to enjoy a competitive advantage thanks to theÂ potential delay of AMD's Barcelona chips, the rising popularity of Intel's new Santa Rosa notebook platform, and the continued sales of Core-family chips for desktop PCs.
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A tax break saves the chip-maker from a big quarterly loss.
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The demand for wireless chips takes a turn for the worse for this company.
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The company's development group has been hit with layoffs.
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STOCKS in the United States fell - led by technology shares - after the world&#39;s biggest semiconductor maker Intel cut its revenue forecast because of slowing demand for personal computers and mobile phones.
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Trade organization attributes dramatic price drops, including a 35 percent decline in flash memory, to glut of competitors.
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The German maker of semiconductors said that a downturn at its Qimonda computer memory chip subsidiary pushed it to a loss in the first quarter as chip prices fell.