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Posts Tagged ‘recession’

Semi Inventories Rise, Expansion Slows

Friday, July 8th, 2011

Two recent reports suggest that the semiconductor industry may be headed for slower growth throughout the last half of 2011.

A recent iSuppli report notes that semiconductor inventory levels have risen, “for the consecutive month in a row in the second quarter, as the industry rebuilds depleted stockpiles and prepares for expected increases in demand.”

A related report from e-Forecasting has concluded that, “the probability of recession in the next six months in the North America Semiconductor industry … registered 87 percent in May. As a result, the odds of business expansion in the next six months for the Semiconductor industry were at the 13 percent mark in May, lower than April’s reading of 18 percent.”

NA Semiconductor Forecast from eForecasting.com

 

The eForecast report lists the following six components that negatively contributed to their composite list of leading indictators: Productivity Advancements, Manufacturing; Weekly Hours, Semiconductor; International Demand Prospects, 35-countries; Change in Profit Margins, Semiconductors; Housing, Diffusion Indicator; NAPM Diffusion Indicator, Manufacturing;

These predictions, combined with a slowing US economy, suggest that the recession ride still has a few more twists and turns. Hang on, everyone.

A Smaller Semiconductor Industry Moves Forward

Thursday, January 28th, 2010

The good news is the economic improvements in the semiconductor market. But let’s remember that true recovery is still a long ways off.

For example, Intel recently posted a huge jump in 4Q09 profit of $2.3 billion, or 40 cents a share, compared with a profit of $234 million, or 4 cents a share, for the year-earlier period. Quoting from a consensus survey by Thomson Reuters: “Revenue was $10.6 billion, up from $8.2 billion for the same quarter in the year-earlier period.” The article notes that this profitable quarter was due primarily to cost cutting measures.

The fact that this huge profit was achieved primarily by shrinking the corporation is nothing special to the semiconductor market. This is the way almost every successful company has achieved profits during this recession.

Does that mean the economy is improving, at least in the short term? A recent article in the Wall Street Journal reminds us that, “… since a peak in 2005, Intel’s revenue is down 9.5% and its earnings are down nearly 50%. The company’s work force? It’s at 2003 levels.”

Will smaller semiconductor companies be capable of maintaining the innovation needed to create new products that drive consumer and corporate spending? That depends greatly upon how companies have cut back on their workforce, the data for which is difficult to find.

Still, the outlook is encouraging. iSuppli recently reported that, “after a 6.7 percent drop in 2009, the global consumer electronics market is expected to achieve a mild recovery in 2010, with revenue expanding by 1.6 percent partly because of improving sales of LCD-TVs, digital set-top boxes (STBs) and appliances.” Not terribly innovative products, but growth in any sector is still good.

Whether that growth leads to a long term economic recover is hard to tell. We’ll find out together.

Chip Revenues Grow, but Software is the Future

Friday, December 11th, 2009

The headlines look promising for the semiconductor industry. In the latest news, Texas Instruments (TI) and Xilinx are prospering amid a rising demand for chips. TI reported that it grew 19% from a year ago, while Xilinx expects revenues to rise between 16% to20% compared to it’s second period. Other chip companies enjoying rebounds include Marvell Technology, Altera and Microchip, as recently reported in the Wall Street Journal. Intel is also doing well with its revenue sharing hitting a four-year high, as indicated by a recent iSuppli report.

Which markets reflect the largest share of this growth? Those details are a bit sketchier. Early last year, TI did  shift a large percent of its business to low power and analog mixed signal (AMS) technology rather than digital chips – especially in the areas of medical, data storage and industrial equipment.

Xilinx continues to increase market share against traditional ASIC vendors, especially as economics favor standard products over customized ASICs in global recession markets. (Has anyone plotted Makimoto’s Wave beyond 2007?)

These happy economic tidings are in contrast to the acquisition trends that have occurred this year. The most noticeable trend in the later is the move by major chip (and EDA) venders to purchase software companies – from embedded operating systems to application development. As Ed Sperling points out in a recent blog; “Not all parts of the industry are poised for significant growth in the future …The value has shifted from just hardware or software to hardware and software.” [5 Reasons For Change]

What does this all mean? For the immediate future, the semiconductor industry is experiencing a rebound. In the long run, though, hardware alone will not be enough. Software must be part of the total long term revenue and technical picture.