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

To: Return to Sender who wrote (49555)	9/26/2010 12:45:02 PM
From: Sam	3 Recommendations Read Replies (1) \| Respond to of 95487

September IC weakness raises red flags Mark LaPedus 9/23/2010 5:24 PM EDT eetimes.com SANTA CLARA, Calif. – Right now, the analog, memory, PC chip and other markets appear to be in a seasonal lull-if not slump. Are we in a slowdown, lull, or a dreaded downturn? None of the above. After a hot start in 2010, the IC industry has ''returned to normalcy,’’ said G. Dan Hutcheson, chief executive and chairman of VLSI Research Inc. In other words, the IC market has cooled down to some degree and is back on a more of a rational growth cycle. There are still areas of concern. Chip sales for the month of September-which are a telling sign for the IC industry for the remaining of the year and going into next year-are less than spectacular. ''You know the saying: ‘September makes the year,’ ’’ Hutcheson said. ''September is really soft. This is worldwide. The slowdown in the economy is having a rippling effect in the semiconductor and electronics industries.’’ It’s a mixed bag in the market. PC-related chip sales are slowing. The DRAM market ''is collapsing.’’ Cell phones are strong, while NAND is holding steady. Analog is a mixed bag. And the IC-assembly and foundry markets are decent. ''Electronics sales activity also slowed down, proving that OEMs are right to be cautious about component buying. That said, this should come as no surprise, because the back-to-school buying season is over and the kids are back-in-school,’’ he said in a report. VLSI is maintaining its previous forecasts for 2010. The IC market is expected to grow 33.7 percent in 2010, while the fab tool business is projected to jump 103 percent, according to the firm. If the market had not cooled off, those numbers would have been larger. The real impact could be felt in 2011, which is expected to be a lukewarm year. In 2011, the IC market is expected to grow 6.6 percent, while the fab tool business is projected to grow 10.6 percent, according to the firm. Right now, there is reason to be worried for the remainder of 2010 and heading into 2011. ''The PC market and consumer electronics continued to falter. Intel has reportedly cut prices sharply for processors and chipsets to clear inventory. We expect to see pressure in the MPU spot prices in the coming weeks,’’ according to VLSI Research. Advanced Micro Devices, Intel and Nvidia have cut their respective outlooks, it was noted. ''The memory market (continues) to weaken. DRAM suppliers are facing tremendous stress as spot prices continued falling at an alarming rate,’’ according to VLSI Research. ''Mainstream DDR3 spot prices collapsed by more than six times faster than the 24-month Moore’s law rate. At the current rate of decline, the profitability of DRAM suppliers is now at risk. The driving force is a weaker laptop market, which was confirmed in Best Buy’s remark last week that laptop sales are being hurt by Apple’s iPad,’’ according to VLSI. ''The overall spot price-per-bit for DRAM fell 3.7 percent, following a 1.5 percent drop in the previous week. It is the largest decline that we’ve have seen in two years. Spot prices for mainstream DDR3 continued to unwind at an alarming rate for the fifth straight week, falling by as much as 5.4 percent. Spot traders may have been spooked (as) a Kingston vice president (remarked) that the DRAM sector could see crisis if demand stays weak for 3-4 more quarters. The weakness in spot market also led to a 5.2 percent decline in overall DRAM contract prices. The most distressed part was … no surprise here … in DDR3 contract prices, which fell 9.5 percent,’’ according to the firm. ''In contrast to DRAMs, NAND flash price declined at a much lower rate. Still, NAND flash price declined at two times faster than the 24-month Moore’s law rate,’’ according to the firm. ''The handset and tablet markets are the main demand driver for NAND and the weakness is due to the fact that Apple has made their buys for the year.’’ There is some good news. ''The bright spot in the chip market is the handsets ICs market. ASE reported a better than expected order pickup for 4Q10,’’ according to the firm. ''Additionally, the tablet market is also heating up. Samsung announced the launch of Galaxy Tab tablet. This is good news to the handsets ICs and NAND suppliers.’’ Foundries are holding up despite weakness in the overall market. TSMC expects their revenue to rise at least 40 percent in 2010 and 10 percent in 2011, according to VLSI