Weak June data, dim outlook slam chip stocks
By Eric Auchard
NEW YORK, Aug 2 (Reuters) - European semiconductor sales fell 4 percent in June compared with May, as overall chip sales around the globe were flat, month-to-month, the U.S.-based Semiconductor Industry Association said on Friday.
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Citing the data and signs of a weakening global economy in the second-half of 2002, brokerage Morgan Stanley said it was cutting its global 2003 revenue growth forecast to 15 percent to 20 percent from the 20 percent to 25 percent growth it had expected.
The weak June data and darkening outlook for next year, which many have hoped would mark one of the industry's periodic boon years, slammed investor confidence in both Europe and the United States, leading to a widespread chip stock sell-off.
The Philadelphia Semiconductor Index lost nearly 5 percent in morning trading, sinking to lows unseen since late 1998. Shares of each of the 16 leading U.S. chip and chip equipment makers that make up the index's components into the red.
"Due to the recent trend of negative economic data, we have lowered our 2003 revenue growth forecast from 20 percent-25 percent and a double-dip economic scenario would lead to further downside," the Morgan Stanley report said of mounting fears that the U.S. may be slipping into a second recession.
"If end demand (particularly for PCs) doesn't improve or consumer spending begins to waver, we believe that our 2002 growth forecast for 0 percent to 5 percent will prove to be too high," the report said, adding that this would put its 2003 estimates of 15 percent to 20 percent growth in further danger.
As recently as June, the SIA trade group had issued its mid-year revenue growth forecast, which predicts that the global chip market will grow only 3 percent, but then accelerate in 2003 to grow by 23.2 percent for the year.
Worldwide, sales slid 0.2 percent overall in June versus May. Sales declined 1.6 percent compared with June of 2001.
The shares of Philips Electronics (Amsterdam:PHG.AS - News), the Dutch consumer electronics and chip maker lost more than 10 percent in trading on the Amsterdam market, while STMicroelectronics (Paris:STM.PA - News), the Franco-Italian chip maker gave up 6 percent in Paris trading.
Texas Instruments (NYSE:TXN - News), the leading maker of chips used in mobile telephones, lost 9 percent, while stock of National Semiconductor (NYSE:NSM - News) lost nearly 6 percent after it warned of flat revenue growth for its current quarter ending in August.
The shake-out and restructuring of telecommunication markets, in addition to a slow recovery in the personal computer market, caused what the Silicon Valley-based trade group described as a short-term decline in European sales.
Nonetheless, European sales in June dropped to $2.14 billion, or 14.3 percent from the $2.50 billion compared with June of 2001.
JAPAN IS BRIGHT SPOT IN JUNE, ASIA FOR YEAR AS A WHOLE
Putting a brave face on the monthly data, the trade group emphasized that, for the three months ended in June, global chip sales rose 5.8 percent to $11.35 billion in the June quarter from $10.73 during the March quarter.
"While computer and computer-related sector demand is lagging, wireless and consumer sectors continue to strengthen, SIA President, George Scalise said in a statement.
Morgan Stanley's team of semiconductor research analysts worried that recent growth has come not from underlying new demand for electronics in so-called "end-markets" but from restocking of depleted inventories by industry suppliers.
"While end-market inventories remain low, we believe that end-demand must improve to support our growth rate assumptions for the second half of the year," read the report by analyst Mark Edelstone and others on the global research team.
End-demand is the way the industry describes markets for finished computers, consumers electronic and communication products.
Relative strength in mobile phones and consumer electronics drove strong, double-digit growth in sales during the latest quarter for products such as flash memory, digital signal processors, custom chip devices, and analog chips, it said.
Japan stood out from the rest of the world by posting growth of 5.4 percent in June compared with May, driven by strength in digital consumer products such as cameras.
Flat-growth in Asia-Pacific, the electronics manufacturing workshop of the world, reflected weakness in overall demand for global demand, offset by the on-going shift by North American and European manufacturers to Asia, especially China, for computer boards and finished boxes.
Still, year-to-year, Asia-Pacific chip sales have risen 29.5 percent -- despite a two-year slump in overall global industry sales -- reflecting the shift of manufacturing to the region.
Sales in the Americas fell 2.4 percent in June over May, hurt by weakness in personal computer markets, the SIA said.
The figures are compiled by the World Semiconductor Trade Statistics (WSTS) organization, which represents about 66 major chip production companies around the globe.
biz.yahoo.com
I think that NVDA is a company specific problem. Someone else laid it all out in another post how graphic chip stocks that once had something great going for them have almost all faded to obscurity in the past. NVDA may be just one more failure soon if ATYT has such a substantial lead in the next generation design wins.
RtS |
