John,
heres ssb's report from AMD thread.
Demand doesnt look too great:
To: Mani Ahmadi who started this subject
From: albert kovalyov Tuesday, Sep 5, 2000 11:29 AM ET
Respond to Post # 7573 of 7578
SSB on semi 1/2:
08:55am EDT 5-Sep-00 Salomon Smith Barney (Jonathan Joseph 415-955-4998) INTC
The Semiconductor Beat
SALOMON SMITH BARNEY Industry Note
Semiconductors
The Semiconductor Beat
September 5, 2000 SUMMARY
* August was not a great month in the MPU gray
Jonathan Joseph market, following a rather weak July. While we
415-955-4998 still expect a pickup in September, we believe odds
jonathan.joseph@ssmb.com for a blow-out quarter for Intel and AMD for
Edward Sun processors are diminished.
415-951-1830 * DRAM trading has also been slow, punctuated by
edward.j.sun@ssmb.com occasional days of brilliance. Prices by and large
Mark Bertagnolli represent a wait-and-watch mode, holding in the
415-951-1832 low-$8.00 range for 64Mbs, and about $16.50 for
mark.bertagnolli@ssmb.com 128Mbs.
* A number of component suppliers to the cellular
market are further revising downward their 2000
cell phone forecast. Hyundai, a supplier of
low-power SRAMs, has revised downward its forecast
from 430 million to 390 million units, while
Mitsubishi has also revised downward.
* Flash availability remains good, with the general
pricing trend lower. Demand appears to be strong in
high density 32Mb parts, and somewhat softer in
16Mb and lower density parts, depending on the
product.
CELLPHONES HAVE ANOTHER SHOE TO DROP
We suspect component suppliers into the cellular handset market are beginning
to see some inventory build. It is well known that handset demand is below
forecast. Forget the "stretch" estimates of 470-500 million units the market
was forecasting a couple of months ago. For the first time, major players in
the market are forecasting less than 400 million units this year, and estimates
are being revised downward weekly. Hyundai Electronics recently revised
downward its internal handset forecast from about 430 million units to only
about 390 million. They have recently received pushouts of low-voltage SRAMs
from all of their primary European customers. Mitsubishi and Samsung, we
understand, are seeing similar trends.
MOTHERBOARDS ALSO WEAK IN AUGUST
At least for the first two months of the quarter, PC motherboards do not appear
to be faring much better. Anecdote from Taiwan suggests the motherboard
business there was weaker than expected in August, on the heels of a weaker
than forecast July. One large supplier of memory into that market estimated
lower-tier m'board makers came in as much as 25% below plan, while top-tier
came in 15% below plan in August. These are not scientific numbers, but do
represent the palpable disappointment that the "avalanche" of demand we
expected in those markets continues to be pushed from July, to mid-August, late
August, and now mid-September. Though we do not believe the system is awash in
inventories, one large supplier of clocks into the PC market believes there is
two weeks of excess inventory in the system, an estimate that foots with DRAM
brokers we have spoken with.
MICROS ARE STILL A DISCOUNT TO LIST
Given the obvious weakness in the system, we would not be surprised if Intel
(INTC-$74, 1M) investors stop talking about a 12-15% sequential increase in
microprocessor unit shipments this quarter and start looking for 10% growth, or
less. Nor should we look for a blowout from AMD# (AMD-$37, 2S). That suggests
these companies may come more in-line than surprise big to the upside. Pentium
spot market prices have persistently traded below list price for the third week
in a row, despite recent 12% Pentium and 23% Celeron price cuts. Processor
prices on average traded 2% below list, while Pentium IIIs traded 7% below.
Recall that last spring when processors were tight and demand strong, spot
prices continued to trade above list prices, and sometimes significantly above,
even following a "price move." Average AMD prices edged down slightly, but were
generally stable. Though availability of the high-end Thunderbird seems pretty
good, we hear persistent talk out of Taiwan that the chipset and motherboard
support is not there for AMD to maximize potential high-end sales (which, or
course, is not equal to lower than forecast sales).
DRAM STILL PRETTY LACKLUSTER
Overall, the DRAM market has been pretty slow. One broker did 82% of his
business in DRAM in the month of June (remember when it was looking like the PC
market was picking up even earlier than last year?); in August only 40% of his
trades were in DRAM. Trading in the main-memories, however, have been
punctuated by flashes of brilliance. Thursday this same broker was getting
million-unit orders from module makers. Friday his phone was utterly dead. The
only sound in the room was him beating his head against the wall. As mentioned,
prices by and large represent a wait-and-watch mode, holding in the low-$8.00
range for 64Mbs, and about $16.50 for 128Mbs. We figure the OEMs and the
brokers still have a few weeks of inventory---Dell told a SSB bus tour on
Thursday that prices had not risen as fast as they anticipated---which could
mute the pickup. We still believe, however, a modest pickup is in the works in
September.
STRONG FLASH SALES, BUT PRICES APPEAR TO BE EASING LOWER
Virtually everyone we talk with about the Flash market reports strong unit
demand. We have continued to see more product come into the market in recent
weeks, however, suggesting supply is growing slightly faster than consumption
at present. This is resulting in a gradual easing in prices. On widely watched
broker quoted 32Mb TSOPs flat at $145, 16Mb TSOPs (the bellwether for
cellphones) mixed, while both 8Mb and 4Mb downticked slightly. According to
brokers, the pickup in spot market volume is an indication that increasing
numbers of OEMs are unloading excess product into the market (at a tidy
profit). |
