I am sorry but here is someone else that needs a brain;
doublebooking is a common term and it means customers are padding to the upside. it does not mean they order twice the number of chips.
few people question;
Lipacis fueled bearish chip sentiment by writing that PC makers are likely to order double the number of chips they actually need. Such double ordering often happens ahead of periods of expected high demand—in this case, the yearend holiday season.
There are other thing like lead/cycle time that impact order behavior.
I can pull up a post from six weeks ago or so that stated that NB sales would be restrained by shortage of panels.
A Slice of Gloom for Chip Stocks
Fierce competition, price declines, and overcapacity concerns are creating bleak prospects for the chipmaking giants
by Arik Hesseldahl
Technology
* Reinventing Sun Microsystems
* Microsoft Taps Thompson to Run Zune
* What Facebook Could Learn from MySpace
* Questions Dog Nokia-Siemens Networks
* Malaysia to Get High Speed Broadband
Story Tools
* post a comment
* e-mail this story
* print this story
* order a reprint
* digg this
* save to del.icio.us
Computer-chip stocks came under pressure Oct. 3 after a bearish earnings report from memory chip maker Micron Technology (MU) and a downbeat industry assessment from Morgan Stanley (MS) analyst Mark Lipacis, who issued "underweight" ratings on Intel (INTC) and its main rival Advanced Micro Devices (AMD), the world's largest makers of semiconductors.
In a note issued Oct. 2, Lipacis said he expects competition between AMD and Intel to take a toll on the price of chips. That came a day after Micron reported its third-straight quarterly loss and forecast price declines for the memory chips that make up the bulk of its sales. On Oct. 3, Intel share prices slipped 2.2%, to $25.81, while Micron stock tumbled 8.9%, to $10.74. AMD stock was little changed at $13.23.
Intel-AMD's Tug-of-War
Lipacis fueled bearish chip sentiment by writing that PC makers are likely to order double the number of chips they actually need. Such double ordering often happens ahead of periods of expected high demand—in this case, the yearend holiday season. Historically, the tactic has proven to backfire badly after the first of the year, when prices on chips fall as unsold PCs left over from the holiday season sit on shelves and chip factories are forced to slow production.
One way or the other a drop-off in demand is coming, either before or after the first of year, Lipacis wrote. Intel will come under extra fire from AMD, which is likely to ramp up production to generate much-needed cash. That extra production in turn will keep average selling prices under pressure. "Issues around overcapacity and the risk of double ordering will drive fundamentals and the stocks over the next 6-to-12 months," he wrote.
The outlook suggests a continuation of a long-standing tug-of-war between the two chipmaking giants. AMD has spent most of the year suffering a powerful counterattack by Intel, prompted by AMD share gains in the server chip market during 2005 and 2006. AMD's latest effort in the server space, a chip code-named Barcelona, was released last month (BusinessWeek, 9/11/07) but hasn't yet had measurable effect on the market. AMD pushed its share of the server chip market from 3% in 2003 to 26% by 2006, only to see it fall back to 13% by the second quarter of this year, according to research firm IDC (IDC). Intel has been using its advantages in the consumer desktop and notebook markets to counterbalance any advantages AMD may have in servers. Lipacis set a price target of $22 for Intel and $11 for AMD.
Few Holiday Hopes
Shares of Micron came in for an even bigger drubbing. The Idaho-based maker of commodity memory chips known as Dynamic Random Access Memory, or DRAM, said it posted a fiscal fourth-quarter loss of $158 million on sales of $1.44 billion, its third consecutive quarterly loss. The company also painted a picture of increasing problems on prices. Micron said it expects average selling prices on DRAM to decline by 10%, and prices on NAND-type flash memory chips, widely used in consumer electronics like Apple's (AAPL) iPod, which it manufactures through a joint venture with Intel, to fall 25%.
In both cases, Micron is competing against two South Korean giants, Samsung and Hynix Semiconductor (HXSCL), which together control the majority of the market and substantially influence prices, says analyst Ashok Kumar of CRT Capital Group. |
