LOOK like it is an INTEL specific problem:
Intel Sales Warning Reverberates in Asia; Companies Still Bulls
9/21/00 11:30:00 PM
Source: Bloomberg News
Tokyo, Sept. 22 (Bloomberg) -- Intel Corp.'s admission third- quarter sales will fall short of forecasts reverberated across Asia, dragging computer-related shares lower on mounting concerns the industry's outlook has dimmed.
Asian companies such as Taiwan Semiconductor Manufacturing Co. and Korea's Trigem Computer Inc., however, said they remain positive. Weaker demand in Europe for Intel chips, blamed by the world's largest chipmaker for its sales shortfall, may be more a result of its own missteps than a weak market, analysts said.
Intel has suffered this year because of faults in some of its processors and chipsets and delays in product shipments. Though the problems had been known about for some time, Intel's warning sent its stock down 21 percent as investors showed they're skittish about the computer industry's outlook.
'' In the next two to three weeks the whole sector will be dragged down because Intel's market cap is so huge,'' said Warren Lau, an analyst at HSBC Securities in Singapore, adding Intel's switch to making smaller chips may partly be responsible for slowing sales. ''Their execution may not have been too smooth.''
The Santa Clara, California-based company last month stopped shipping its fastest Pentium III processors as the chips have a glitch under some conditions, though the company says the recall won't affect earnings. Intel has also been shifting production to emphasize technology capable of producing smaller circuit features on its chips.
Intel said sales will rise 3 percent to 5 percent from the second quarter's $8.3 billion. The company hadn't given a specific target, though spokesman Tom Beermann said sales will be less than Intel anticipated. Gross profit margin also will be worse than expected.
Concerns
Several analysts have expressed concern in recent weeks that demand for consumer personal computers has slowed, saying the recovery that usually comes with the back-to-school season hasn't materialized yet. European sales accounted for 22 percent of Intel's revenue in the second quarter.
Intel's disclosure sent its shares reeling. The shares traded as low as 48.38 after the announcement. They had fallen 1.58 to 61.48 yesterday. The stock had risen 49 percent this year.
In Asia, the warning hit chipmakers and computer-related companies. Korea's Kospi tumbled 7.2 percent, while Japan's Nikkei 225 stock average fell 3.1 percent. Chipmakers also led as Taiwan's TWSE index fell 4.5 percent and Singapore's Straits Times Index lost 3.1 percent.
In Korea, Samsung Electronics Co., the world's largest maker of computer memory chips, fell 13.6 percent to 190,000 won. Hyundai Electronics Industries Co., the world's second-largest computer chipmaker, fell 9.8 percent to 14,350 won.
Japan
The picture was similar in Japan where NEC Corp., the world's fourth-largest maker of computer-memory chips, fell 7.7 percent to 2,510 yen. Toshiba Corp., the world's biggest maker of laptop computers, fell as much as 3.9 percent to 906 yen.
Singapore's Chartered Semiconductor, the world's No. 3 maker of chips to other companies' designs, fell as much as 11.5 percent to S$11.50. In Taiwan, Taiwan Semiconductor fell 7 percent to NT$106.50. Via Technologies, the world's No. 2 chipset designer after Intel, fell 4.5 percent to NT$380.
As stocks slumped, computer makers and analysts in Asia said Intel's problems could be isolated. In May, Intel offered to replace about 1 million circuit boards because of a fault that caused some personal computers to shut down or freeze up. The company has also acknowledged problems meeting customer orders.
TSMC
Taiwan Semiconductor said it has seen no change in orders from its customers since raising its earnings forecast. Earlier this month, Taiwan's largest publicly traded company by market value said net income will rise to NT$64.0 billion ($2.1 billion) from NT$24.6 billion last year.
''Overall the semiconductor market is growing. The most significant growth for our company has been in the manufacture of chips for communication devices,'' said Guo Shan-shan, a company spokesman. ''Last year, sales of communication chips were 30 percent of our total sales while in the second quarter they were 39 percent of sales.''
First International Computer Inc., one of Taiwan's top three computer makers, said it increased purchases of processors from Advanced Micro Devices Inc. because Intel, its main supplier, can't keep up with demand.
First International Computer's sales in Europe are currently about 10 percent lower than expectations, said sales department director Ralph Liu.
''AMD now represents about 30 to 35 percent of our production,'' said Liu, higher than before. ''It looks like AMD's share may be increasing in the future.''
Trigem Computer Inc., the Korean computer maker whose profit has surged on growing exports to the U.S. and Japan, said because European sales comprise only 1/10th of total revenue, any slowdown in that market is unlikely to affect their forecasts.
While personal computers still represent the largest market for semiconductors, other devices such as mobile phones and digital consumer electronics have grown in importance. Chipmakers are benefiting as their products find broader uses. Commodity memory chips, for example, are increasingly used in cellphones and digital cameras.
Companies that make chips for telecommunications equipment and personal organizers probably won't see a slowdown in demand, said HSBC's Lau.
''This will affect more PC-centric semiconductor chipmakers, like Intel,'' he said. |
