Global Sources
EE Times-Asia
Stay in touch with EE Times Asia
?
EE Times-Asia > EDA/IP
?
?
EDA/IP??

Analysis: Two giants brace for dim Q4, unpredictable '09

Posted: 21 Oct 2008 ?? ?Print Version ?Bookmark and Share

Keywords:semiconductor? microprocessor? 32nm?

The two fiercest rivals in the IC market have something both of them can agree upon: The forecasting environment just got murkier.

No good signs that problems in the wobbly global economy are available and troubled financial sector have hurt technology companies' market results in Q3, but both Intel Corp., the world's top chipmaker by revenue, and its microprocessor rival Advanced Micro Devices Inc. (AMD) say they have no clear idea how Q4 will shape up.

Don't even ask Intel or AMD officials about 2009. Whether it's the seasonally weaker 1H or the stronger 2H, which generally gets a boost from back-to-school sales, uncertainty remains to prevail.

No clear indication
"Who knows what 2009 is going to be?" said Paul Otellini, president and CEO, Intel, during a conference call with analysts after the company announced its Q3 results.

Executives at AMD, which posted stronger than expected Q3 results, agreed. "We are not expecting a shrink in business from Q3 to Q4 but it is pretty murky," said Dirk Meyer, president and CEO, AMD.

The current market uncertainties present challenges not simply for Intel and AMD but also to the whole high-tech market, involving deeper into the industry supply chain as companies grapple with such financial issues as sales and marketing costs as well as R&D and capital expense requirements.

Prevailing issues
At the same time, lack of adequate visibility into end-market demand can negatively affect how companies identify such critical operational functions like factory capacity utilization and optimal inventory level. The latter is an area where the high-tech industry has repeatedly tripped up during previous economic downturns.

"In Q3, we had to start making the signals for Q4 with the expectation that the quarter was going to be strong. We have backed off a bit in the manufacturing environment to manage inventory in a marketplace that looks a little turbulent," said Bob Rivet, chief financial officer, AMD. "We probably built a little more inventory in Q3 than a flattish environment would tell you to do, but had to make that call in the summertime."

Intel, as well, initially expected robust Q4 sales, but while actual demand remains strong, the company is dialing back expectations due to what Stacy Smith, chief financial officer, Intel described as a "high degree of uncertainty around Q4 demand."

Wait-and-see
The skittishness is reflected in Intel's Q4 revenue forecast, which it expects would be between $10.1 billion and $10.9 billion, the widest range in the company's history. Smith said Intel is not yet going to provide a forecast for 2009.

"We need to see the impact of what's roiling through the credit markets and that's what is giving us the higher range of potential outcomes for revenue in Q4, and we've got to watch that and then we'll have a better sense for 2009," he added.

The cloudiness also affects Intel's capital expense outlook for 2009. Analysts pressed the company for an assessment of how much it expects to spend in 2009, but company executives would not budge, insisting they could only confirm plans to continue with 32nm process technology.

"We want to see how Q4 performs, and I think that will give us a much better indication of 2009 from a unit growth standpoint. That will obviously have implications on our capital spending," Smith said. "The hints I've given so far are what we still plan to do in 32nm as fast as we possibly can."

- Bolaji Ojo
EE Times





Article Comments - Analysis: Two giants brace for dim Q...
Comments:??
*? You can enter [0] more charecters.
*Verify code:
?
?
Webinars

Seminars

Visit Asia Webinars to learn about the latest in technology and get practical design tips.

?
?
Back to Top