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Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Woody_Nickels who wrote (42675)	1/14/2009 9:06:59 AM
From: Kirk ©	Respond to of 95526

IC designers cut prices 10% after seeing rush orders for 1Q09 Original date: 2009/1/14 www.digitimes.com IC design companies have begun cutting prices in order to vie for an recent influx in orders from the handset and notebook segments. The cuts are expected to increase shipment volumes for individual makers, but will expand the decline of chip ASPs for the first quarter, according to industry sources. In the past, chip ASPs typically fell at a rate of 5% each quarter. But under the current economic climate, sequential declines may top 10%. Since the global IT industry is expected to remain weak in 2009, the rate of falling chip prices will not be insignificant, IC designers have commented. The sources indicated that IC design companies did not cut prices in the fourth quarter of 2008, even though orders and sales slumped sharply, because customer inventory levels were still high. However, since some customers began rebuilding their inventory at the start of the year, and visible demand for handset and notebook products has emerged for the first quarter of 2009, price cuts are now a viable strategy for IC companies to increase their shipments. Some Taiwan driver IC suppliers have cut prices by 10% already after seeing a recovery in TFT LCD panel pricing. Netbook keyboard controllers and power management IC makers are also expected to cut prices by nearly 10% in the first quarter. International analog IC companies have also cut their prices ahead of an anticipated increase in sales, and related Taiwan-based companies are expected to follow suit, the sources noted. Market watchers expect to see fierce price competition in the Taiwan IC design market after the Lunar New Year holidays which is estimated to drive MediaTek's gross margin to below 50%. The market watchers also predicted that more than five company mergers or acquisitions will be undertaken in 2009, including affiliations with China or other overseas chip suppliers.