Another analyst lowers chip forecast
MLP
EE Times
06/27/2006
SAN JOSE, Calif. — Another market watcher is lowering its worldwide semiconductor forecast amid sluggish growth in May and weak PC demand.
In a report issued Tuesday (June 27), Handelsbanken Capital Markets projects that the semiconductor market will now grow 5 percent in 2006 over 2005, down from 6 percent in its previous forecast.
The investment banking firm blamed the lowered forecast on the worldwide PC slowdown. Reading the runes on the World Semiconductor Trade Statistics (WSTS) numbers for April, Bruce Diesen, analyst at Handelsbanken, recently predicted a profit warning would soon be forthcoming from Intel Corp., where he said processor volumes fell 21 percent and processor prices had fallen 40 percent compared with April 2005.
What's more, analysts have recently lowered the estimates for graphics-chip rivals ATI Technologies Inc. and Nvidia Corp.
There are other bad signs. "Based on our analysis, we believe wafer foundry demand remains tepid with continued weakness from computer related applications and seasonal weakness from consumer electronics applications," said Bill Ong, an analyst with American Technology Research Inc., in a report issued on Tuesday. The report is based on the outlook for silicon foundry giant Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC).
"While cell phone related chips are seeing strength, we believe upside to the current demand forecast is limited, and thus foresee a relatively uninspiring near-term outlook for TSMC," Ong said. "Fab capacity remains tight at the leading edge nodes at 130-nm and below."
Meanwhile, Handelsbanken also expects another sluggish month for worldwide semiconductor sales. The three-month average of May chip sales is projected to hit $19.37 billion, compared to $19.6 billion in April, according to the firm. The actual numbers will be released on Friday.
Global semiconductor sales were up 8.1 percent year-to-year in April, reaching $19.6 billion, the Semiconductor Industry Association (SIA) recently said. Sequentially, however, worldwide chip sales slipped a nominal 0.4 percent from March, the SIA (San Jose) said.
April's dismal numbers prompted Wedbush Morgan Securities Inc. (Los Angeles) to lower its 2006 semiconductor growth forecast from 11 percent to 10 percent. For 2007, Wedbush projects that the IC market will slow and grow by only 6 percent over 2006.
Don't look now, but Gartner Inc. also may be in the process of reducing its IC forecast for 2006 — after recently reiterating its estimate for 10.6 percent growth this year.
Worldwide chip sales were terrible in April, according to the research firm. As a result, worldwide chip sales in Q2 could be "about $4 billion lower than our previous estimate of $61 billion" unless there is an uptick in May and June to make up for April, according to the firm.
So, based on normal patterns for the second half, the IC market could grow by only 6 percent in 2006, compared to the industry consensus of 10 percent, the firm said. Gartner will release its new forecast on August 15.
Others have a different viewpoint. The WSTS last month raised its semiconductor forecast.
The global semiconductor market is expected to grow 10.1 percent on an annualized basis to $250 billion in 2006, according to the spring forecast of the WSTS. Projected growth in the worldwide semiconductor market will accelerate to 11.0 percent in 2007 and 12.8 percent in 2008, according to the organization. |
