The sell side with its gloom and doom scenario appears to be running out of steam...nobody denies a slow down/cool down period but the sky is not falling; ML already jumped chip upgrading the foundry sector...
The 8 inch stuff is probably fully depreciated
TSMC and UMC to post opposite results in capacity utilization in 4Q10
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Ingrid Lee, Taipei; Willie Teng, DIGITIMES [Wednesday 6 October 2010]
With decreasing orders from Taiwan-based IC design houses, Taiwan Semiconductor Manufacturing Company (TSMC) and United Microelectronics Corporation (UMC) will likely see mixed results in the fourth quarter of 2010, according to market watchers. TSMC's material consumption will increase 0-3% sequentially, which implies a slight climb in utilization, while UMC could see a single-digit decline.
With strong orders coming from international customers such as Qualcomm and Broadcom, TSMC's material consumption in the fourth quarter is still on the rise, market watchers pointed out. Though utilization for 8-inch capacity will fall from 95% in the third quarter to about 90-92%, its 12-inch capacity is expected to remain fully utilized.
UMC's fourth-quarter orders are weaker across the board except from LCD driver IC vendor Novatek, market watchers indicated, adding that monthly shipments should reach 60,000 units and will overtake MediaTek as UMC's largest customer in the fourth quarter. With most Taiwan-based IC design houses reducing orders, UMC's material consumption in the fourth quarter could fall 7-10% sequentially.
In related news, IC packaging and testing company Advanced Semiconductor Engineering (ASE) reportedly has received orders from Qualcomm's subsidiary in Japan. The company expects demand from the communications and consumer electronics sectors to be the strongest, and although the PC market is weak, it is still better than expected. ASE's fourth-quarter revenues could increase 6% on quarter and gross margin should remain at the same level as in the previous two quarters.
Categories: Bits + chips IC design IC manufacturing
Tags: 4Q10 capacity Company design IC manufacturing semiconductor TSMC UMC
Companies: Taiwan Semiconductor Manufacturing Company United Microelectronics Corporation
Analyst: All signs point to IC downturn
Dylan McGrath
8/18/2010 3:14 PM EDT
SAN FRANCISCO — Semiconductor industry capacity utilization will peak during the third quarter at 96 percent, then decline to 90 percent in the fourth quarter, according to a Wall Street analyst who believes that the chip industry is headed for a downturn.
"All signs point to another semiconductor downturn as there have now been signs of softening demand from approximately 65 percent of total semiconductor demand," wrote Christopher Danely, an analyst at J.P. Morgan, in a report circulated Wednesday (Aug. 18).
Danely said the PC end market, which accounts for 40 percent of semiconductor sales, appears weak. The communications end market, which accounts for 25 percent of chip sales, is also showing signs of weakness, Danely said, pointing to Cisco Systems Inc.'s second quarter results, which disappointed analysts.
Last week, Danely issued a report saying checks in the Taiwan PC supply chain indicated that order rates from the PC end market deteriorated sharply during the last part of July. (however a month later they went up sharply) see post about knee jerk reaction)
On Tuesday, the Semiconductor International Capacity Statistics organization reported that worldwide wafer fab capacity utilization hit 95.6 percent in the second quarter, up from 93.5 percent in the first quarter.
Danely said J.P. Morgan expects utilization rates to increase to 96 percent in the third quarter due to a 2 percent sequential increase in capacity and a 2 percent increase in wafer demand. But he said the firm expects utilization rates to decline to 90 percent in fourth quarter due to an inventory correction. Danely expects capacity to increase another 2 percent sequentially in the fourth quarter, higher than seasonally normal, while he expects demand to drop by 5 percent sequentially.
Danely said utilization rates and semiconductor stock values have followed the same pattern as they did in 2004, but with a one quarter lag. In 2004, semiconductor stocks peaked in the first quarter and utilization rates peaked in the second quarter, he said. "Similarly, we believe semiconductor stocks peaked in 2Q10 and expect utilization rates to peak in 3Q10," he wrote.
Other analysts disagree with Danely's assessment. Bill Jewell, principal at consulting firm Semiconductor Intelligence LLC, said he believes capacity utilization will continue to increase through the rest of the year, hitting 96 percent in the fourth quarter. Jewell said he believes end demand will hold up at least through the end of this year. "I think capacity got cut so far back last year and just has such a long way to come back," Jewell said in an interview. |
