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

To: FJB who wrote (49029)	8/18/2010 5:24:39 AM
From: FJB	Respond to of 95530

Market shows signs of soft spots, says NXP's Clemmer eetimes.com Peter Clarke 8/17/2010 7:16 AM EDT LONDON – NXP BV, which has closed several fabs in recent quarters, could not meet demand for its chips in the second quarter. But Rick Clemmer, the company's CEO, is not worried that this will allow others to capitalize in Q3 at NXP's expense. While chip demand remains generally healthy there are some market signs of soft spots and Clemmer said that Q3 2010 may not be the sales bonanza Q3 provides in most years. In its financial results for Q2 NXP (Eindhoven, The Netherlands) said it does not expect manufacturing capacity additions being put in place will impact the third quarter to a significant degree and as such predicted flat sales in Q3. "Some customers have given some indications of reduced demand. There is a lot of discussion about softness in PC [personal computer] demand right now, but it's not across the board. High-performance RF may have some softness in some markets," Clemmer said to EE Times. Typically the global chip market jumps sequentially by 8 or 9 percent in Q3 but Clemmer denied that an inability to ramp manufacturing would hurt NXP in the third quarter or that the third quarter would necessarily see a big sequential rise for the industry as a whole. "It all depends. In the industrial segment you don't see that; in the consumer space you do. But some TV demand was pulled forward this year because of the World Cup. Q3 could be softer because of that." "In Q2 there was clearly demand we could not meet; $100 million or so. This was partly due to our success gaining design wins in high-performance mixed-signal," said Clemmer. But he argued that recent fab disposals were about creating a world-class competitive cost structure; getting rid of 4, 5 and 6-inch fabs and allowing NXP to focus its manufacturing in 200-mm facilities such as the Systems on Silicon Manufacturing Co. Pte. Ltd., a joint venture with TSMC located in Singapore. Some 60 percent of NXP's revenue is now in Asia so it is appropriate to have chip manufacturing there, said Clemmer. He added that NXP is going to triple capital expenditure in 2010 to between $240 million and $250 million, compared with $82 million in 2009. "Our main focus is on proprietary process technology," said Clemmer, pointing out that a profitable NXP generated $100 million of free cash flow in the second quarter which helps it step up R&D spending. Meanwhile the company will continue to be opportunistic in terms of acquisitions where they can help bolster technology positions, he said referencing the recent purchase of Jennic Ltd. (Sheffield, England). Clemmer said that environmentally-driven markets, such as power management in automobiles, in power supplies and drivers for lighting, continued to show strength and that NXP was well placed to serve those markets. "Our Greenchip for notebook power supplies now commands a 50 percent market share," said Clemmer adding that he expected the LED lighting market would be driven by industrial and commercial installations rather than residential applications. "We're still sold out in a number of areas and that gives opportunities in terms of ASPs [average selling prices]." Clemmer said that in Q1 and Q2 NXP was able to negotiate flat-pricing for multi-year projects.