Overall Semi Trends
From CITI Asia Tour
What's New — Citigroup is conducting a series of field checks with technology
companies in Asia. We are meeting with over 20 companies, taking a pulse of
demand trends, inventory levels, and order activity, notably post-Chinese New
Year. At this stage, we make 3 conclusions.
? Notebook Demand Surprisingly Solid — Despite fears that macro-economic
issues would impact demand, our checks with several points in the notebook
supply chain point to demand patterns that are largely inline with normal
seasonality. Commentary from notebook ODM’s consistently point to solid March
orders and visibility into 2Q08 is suggesting ~10% q/q growth. Discussions with
flip chip and substrate vendors reconfirm our view that Intel demand is solid, but
now extends this view through March. Although Intel negatively pre-announced
March quarter results due to non-core NAND flash, this underlying core notebook
strength leads us to advise clients to buy on the weakness. Please see 3/4/08 our
note on Intel for details.
? Handsets Decidedly More Mixed — The outlook in handsets was decidedly
more mixed. Component vendors have suggested that since posting an
aggressive order outlook in December, a major handset vendor has been below
plan for January and February. Meanwhile, in March, signs of order
cancellations are becoming evident as post-Chinese New Year recovery has been
pushed out. A foundry suggested that handset is one of their worst performing
areas. Noting that several contacts have commented on TI’s limited success in
3G and issues with Ecosto (already mentioned by Motorola), and that substrate
vendors have seen declining orders from TI, we maintain our below consensus
and below mid-point outlook for TI’s 1Q08. Recall TI will provide a mid-quarter
update on 3/10.
? FPGA Showing Spike Upward in 2Q08 — Checks with substrate vendors
suggest FPGA demand is showing a strong upward spike March-May. Based on
these suggestions, we have a high degree of confidence in 2Q08 consensus
revenue growth of 3.1% and assert that upside to this figure is reasonable. Given
that the source of strength is likely broadcast-related consumer and wireless
infrastructure, we add that we are not concerned about any mix-related margin
impact. Particularly now that 1Q08 guidance has been reconfirmed, we reiterate
our non-consensus “buy” rating on Altera. |
