All signs point to IC downturn
August 19, 2010 // Dylan McGrath
Semiconductor industry capacity utilization will peak during the third quarter at 96 percent, then decline to 90 percent in the fourth quarter, according to a Wall Street analyst who believes that the chip industry is headed for a downturn.
"All signs point to another semiconductor downturn as there have now been signs of softening demand from approximately 65 percent of total semiconductor demand," wrote Christopher Danely, an analyst at J.P. Morgan, in a report circulated Wednesday (Aug. 18).
Danely said the PC end market, which accounts for 40 percent of semiconductor sales, appears weak. The communications end market, which accounts for 25 percent of chip sales, is also showing signs of weakness, Danely said, pointing to Cisco Systems Inc.'s second quarter results, which disappointed analysts.
Last week, Danely issued a report saying checks in the Taiwan PC supply chain indicated that order rates from the PC end market deteriorated sharply during the last part of July.
On Tuesday, the Semiconductor International Capacity Statistics organization reported that worldwide wafer fab capacity utilization hit 95.6 percent in the second quarter, up from 93.5 percent in the first quarter.
Danely said J.P. Morgan expects utilization rates to increase to 96 percent in the third quarter due to a 2 percent sequential increase in capacity and a 2 percent increase in wafer demand. But he said the firm expects utilization rates to decline to 90 percent in fourth quarter due to an inventory correction. Danely expects capacity to increase another 2 percent sequentially in the fourth quarter, higher than seasonally normal, while he expects demand to drop by 5 percent sequentially.
Danely said utilization rates and semiconductor stock values have followed the same pattern as they did in 2004, but with a one quarter lag. In 2004, semiconductor stocks peaked in the first quarter and utilization rates peaked in the second quarter, he said. "Similarly, we believe semiconductor stocks peaked in 2Q10 and expect utilization rates to peak in 3Q10," he wrote.
Other analysts disagree with Danely's assessment. Bill Jewell, principal at consulting firm Semiconductor Intelligence LLC, said he believes capacity utilization will continue to increase through the rest of the year, hitting 96 percent in the fourth quarter. Jewell said he believes end demand will hold up at least through the end of this year. "I think capacity got cut so far back last year and just has such a long way to come back," Jewell said in an interview.
Rohm buys Renesas wafer fab
May 25, 2015
Rohm Co. Ltd. (Kyoto, Japan) has moved to acquire a 200mm wafer fab from Renesas Electronics Corp. for 450 million yen (about ...
SK Hynix, Sharp move up chip vendor ranking
IDT partners EPC to integrate GaN and silicon technologies
Reduce EMI with 42-V, 5-A synchronous step-down silent switcher
Egg-shaped micro home runs on wind, solar power
Extensible CPU cores exploit IoT's vast potential
May 22, 2015
Cisco Systems has predicted that by 2020, there will be 50 billion “things” connected to the Internet up from 15 billion ...
Audi connects to Baidu, Huawei at CES Asia
LED roadway solutions focus on rural, remote communities
New class of magnets attract energy harvesting attention
- Integrating GPS into consumer products
- Controlling LED Lighting Using Triacs and Quadracs
- Automotive Designs Demand Low EMI Synchronous Buck Converters
- Smart Capacitive Design Tips
InterviewCEO interview: What's next after Tower's turn-around?
May 2015 marks the tenth anniversary of Russell Ellwanger taking over as CEO of speciality foundry Tower Semiconductor Ltd. (Migdael Haemek, Israel), which now trades as TowerJazz. And so EE Times Europe ...
Filter WizardCheck out the Filter Wizard Series of articles by Filter Guru Kendall Castor-Perry which provide invaluable practical Analog Design guidelines.
Linear video channel
READER OFFERRead more
In this month's reader offer, Analog Devices is giving away five Blackfin Low-Power Imaging Platform (BLIP) Development Systems (ADZS-BF707-BLIP2), worth 199 dollars each, for EETimes Europe's readers to win.
Targeting demanding ultra-low-power, real-time applications for image sensing and advanced audio, the development platform leverages the company’s ADSP-BF707BBCZ-4 Blackfin processor as...MORE INFO AND LAST MONTH' WINNERS...
December 15, 2011 | Texas instruments | 222901974
Unique Ser/Des technology supports encrypted video and audio content with full duplex bi-directional control channel over a single wire interface.