Nice article about semi-demand drivers (some stats may be a bit outdated I think - mostly bad):
techweb.com
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Outlook grim for linear analog ICs
By Charles Mantel
A grim market picture may be emerging, as sales of linear analog ICs are
showing signs of weakness so far this year.
Sales of standard linear chips such as amplifiers, voltage regulators, and
comparators are lower than both third- and fourth-quarter sales in 1997.
While this is a typical occurrence, a continued drop in sales into the second
quarter and a slight decline in average selling prices is raising some concern.
Hardest hit is the PC market, followed by the consumer electronics industry.
Linear analog sales into the industrial and instrumentation sectors are up,
while the communications market is flat, balanced by growth in
telecommunications analog-device consumption and a drop in data
communications and wireless sales.
Worldwide linear analog-device sales for the first three months of the year
were 13% higher than for the same period in 1997, but ASPs fell by 6.4%.
Actual consumption during the same period was up 13.4%, which we believe
resulted in decreased inventories for the first quarter.
However, preliminary data for April shows a slowdown in consumption and a
slight increase in inventory. Inventory at distribution is quite low, indicating
that most of the decrease during the first three months of this year and the
consequent buildup in April is taking place at OEM locations.
Although some suppliers are noting increased bookings in April, we find that
overall consumption of linear ICs is dwindling.
Devaluation has made some products more affordable, which has stimulated
sales in emerging areas such as Eastern Europe, South America, and China.
The downturn is worst in Japan and the Asia-Pacific region, but is spreading
to the United States and Western Europe. In the United States, there is hope
that the PC business will pick up shortly, as new peripherals are introduced in
time to increase fall and Christmas sales.
The introduction of Windows 98, for example, might boost sales in the PC
market, although our surveys indicate only a lukewarm reception for the new
operating system at the business level.
Asia may take longer to recover than will other markets, but over the long
term it will grow faster than both the United States and Europe.
Although attributed to the Asian economic issues, the slump in the computer
sector is actually resulting from a maturing market. We have reached a point
where computers will no longer provide the primary growth for
semiconductors. While a distinct replacement is not at hand, communications
and industrial applications are still engines for growth.
Indeed, telecommunications sales during the first three months of the year
were up by almost 35% worldwide, although ASPs were down 9%.
Consumption was up 32%, but declined during April and May.
Inventories are building, especially in the data communications and wireless
markets. Cellular sales are down from a year ago in North America, but are
up in South America and Europe. Modem and LAN sales are also down
after a strong start earlier this year.
The brightest spot in data communications is gigabit Ethernet. Wireless sales
are expected to show continued growth, particularly in markets outside the
United States. Telecommunications sales are also growing as higher-speed
lines, especially fiber-optics-based telecommunications equipment sales,
continue to escalate.
Consumer audio/video sales are up 10%, but ASPs are down 2.5%. Much
of the increase in consumer sales is due to sales of Dolby Labs' digital
receivers and home theater equipment, mini-disk sales, and DVD players.
Automotive sales also remain strong, driven by chips for pollution- and
safety-control devices. New industrial systems invariably include electronic
motor control, and lower power requirements open up a new world for linear
devices that manage power consumption and deliver higher throughput rates.
Even so, automotive sales of linear devices decreased 1.2% from the first
quarter of 1997, while ASPs dipped 4.8%.
Mass-storage sales were down significantly, reflecting the poor market for
personal computers. Sales for the first three months were down 22%, and
ASPs fell 31%. Consumption for the same period was down 24% as
inventories dropped to their lowest level in three years.
Manufacturers of mass-storage devices rushed to market with large-capacity
drives, betting on increased use of PCs for video storage. This never
happened.
Instead, there is a growing tendency to acquire bare-bones systems that
contain smaller hard drives. Hard-drive prices have come down significantly,
but demand has not increased. Recent interviews with major OEM producers
indicate that the sluggish demand will continue for the foreseeable future.
-Charles Mantel (mantel@selantek.com) is an analyst at Selantek Inc.,
Mountain View, Calif.
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shane. |
