CSFB Tech Daily - Semiconductors
September SIA: 3Q Results Beat Forecast But Unit Growth Stalling
•Worldwide semiconductor revenue grew by 3.0% on a 3-month moving average basis (3MMA) and 25.0% on a single-month basis in September. On a quarterly basis, revenue growth of 8.2% exceeded historical average for the third consecutive quarter this year although there is bound to be an upward bias coming off the dramatic industry downturn in 2001. Unit growth (3MMA) settled off its decelerating trend this year at an even 0.0%. ASPs grew by 3.0% M/M on a 3MMA basis, solely driving the revenue growth.
•Analog: Units, revenue and pricing were up 8.7%, 15.3% and 6.0% on an absolute m/m basis in September, compared to typical seasonality of up 9.5%, up 14.6%, and up 4.6% (pricing drove the better than seasonal revenue). Both Application Specific and Standard Linear drove the m/m growth with the most substantial growth coming from the Application Specific segment, which was up 8.8% on a unit basis, 17.9% on a revenue basis, and 8.3% on an ASP basis.
•DRAM: DRAM revenues grew 2% in September, as a 2.6% ASP increase was offset by the second straight month of relatively flat units (down 0.8%), on a 3MMA basis. This ASP increase occurred despite further decreases in spot price ASPs for SDRAM, as we believe product mix continued to shift towards DDR, where premiums still are garnered, relative to SDRAM type memories.
•MPU: As anticipated, September was another relatively uneventful month for processors, with MPU revenues increasing 3%, as units remained relatively flat while ASPs inched up 3.1%, on a 3MMA basis. As we suggested, Q3 was more back-end loaded than normal, we believe in some part driven by Intel's September 1st price cuts.
•Wireless: Wireless DSP units, revenue and ASPs in September were up 5.7%, 7.0% and 1.3%, respectively on a m/m 3MMA basis. Wireless analog/mixed-signal, units and revenues were up 14.5% and 12.2%, while ASPs were down 2.0%. We believe the increases were inline with our belief that the wireless builds continued into September for the holiday season. However, Q4 could be challenging with volatile data points due to supply chain and consumer issues.
•Given the recent softness in semiconductor unit growth, we are cautiously optimistic concerning the near term industry outlook. We continue to favor unit driven diversified companies with broad end-market and broad product exposure. Our stock picks are as follows: Large cap: STM ($20.78, $20, Outpfm), LLTC ($29.26, $26, Outfpm), and MXIM ($33.89, $28, Outpfm); Mid cap: ISIL ($17.34, $25, Neutral) and MRVL ($17.77, $22, Outpfm); Small cap: ICST ($21.20, $23, Neutral). |
