CSFB Tech Daily - October SIA: Unit Growth Remains Muted
• Worldwide semiconductor revenue grew by 1.8% on a 3-month moving average basis (3MMA) and seasonally declined 18.6% on a single-month basis in October. Unit growth (3MMA) dipped back into the negative by declining 1% after a flat September. ASPs showed positive growth for the fourth consecutive month, posting a 2.8% rise on a 3MMA basis.
• Analog: Across the board, the numbers suggest less than seasonal growth in all analog segments in October. Units and revenue were down 10.4% and 10.4% while pricing was up 0.2% on an absolute month-over-month basis in October, compared to typical seasonality of down 6.2%, 5.1%, and up 1.2%. Standard Linear units (down 11.7%) under-performed Application Specific units (down 8.3%), but showed more pricing strength (up 3.0% vs. down 3.2%).
• DRAM: DRAM revenues increased another 1% in October, driven purely by unit increases as ASPs remained relatively flat month-over-month, on a 3-month moving average basis. The DRAM spot-market shows similar ASP trends through October, though DDR ASPs were increasing while SDRAM ASPs have been decreasing, yielding DDR premiums well over 200%.
• MPU: As anticipated during a seasonally strong month, MPU revenues increased 6.4% sequentially during October, on a 3MMA basis, as ASPs and units both increased ~3%. This is in-line with historical 10-year average MPU revenue growth rate for the month of October, which is up 6.5% on a 3MMA basis, however better than the 5-year avg. growth rate of 4.5%.
• Wireless: Wireless DSP units, revenue and ASPs in October were down 21.7%, 29.0% and 9.3%, respectively on an absolute m/m basis. Wireless analog units, rev, and ASPs were down 3.0%, 7.8% and 4.9% on an absolute m/m basis. This wireless DSP and analog data is a bit surprising given positive supply commentary suggesting builds continued strong through Oct and Nov.
• We remain market-weight on the semiconductor sector and continue to favor high-end analog and unit driven diversified companies with broad end-market and broad product exposure. Our stock picks are as follows: Large cap: STM, LLTC, and MXIM; Mid cap: MCHP and MRVL; Small cap: ICST. However, due to the recent run-up in share prices (SOX Semi Index is up 75% since hitting a 52-week low on October 9), we think many of our stocks are fully valued. |
