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Rising demand stabilizes analog IC market

Posted: 14 May 2009 ?? ?Print Version ?Bookmark and Share

Keywords:analog IC market? semiconductor? rising demand price?

Conditions in the analog semiconductor market are stabilizing due to rising demand and slowing price erosion, but a real industry recovery is still far away, according to market research firm iSuppli Corp.

The average worldwide contract price for analog-monolithic semiconductors will decline by 3.9 percent in Q2, compared to 7.8 percent in Q1 and 4.6 percent in Q4 08, according to iSuppli's latest forecast. Prices in Q3 are expected to rebound slightly, rising by 0.7 percent, as demand continues to rise due to the arrival of the pre-Christmas build season, according to the firm.

In a statement, Marijana Vukicevic, senior analyst for power management at iSuppli, said analog semiconductor and transistor suppliers are reporting that demand has returned after a virtual halt in new orders from Q4 08 through Q1 09. "This has caused pricing to stop falling at alarming levels," Vukicevic noted.

Average pricing to decrease
But Vukicevic cautioned that a recovery to business levels seen prior to Q4 08 remains distant. "Analog and discrete suppliers are reporting improvements in book-to-bill ratios, but the overall order visibility remains lowanywhere between two and three weeks depending on the customer and the end product," Vukicevic said.

Average pricing for transistors is set to decrease by 3.8 percent in Q2, an improvement compared to a 9 percent decline in Q1 and a 7.3 percent reduction in the Q4, iSuppli said. The rate of transistor price erosion will dwindle to 0.2 percent in Q3 and to a mere 0.04 percent in Q4, according to the firm's forecast.

"Because transistors and analog-monolithic semiconductors are generic parts that can be used in all kinds of electronic products, sales of these devices can serve as a barometer of larger electronics industry trends," Vukicevic said.

One major factor influencing pricing in the industry is the level of inventory, which had swelled to excess in 2008, according to iSuppli. Despite the poor demand situation in Q1, the electronics supply chain managed to reduce its stockpiles significantly in the first quarter, the firm said.

With analog and transistor revenue rising, utilization rates at fabs producing these products are increasing, iSuppli said. Utilization rates for analog and transistor fabs in Q1 were in the low 40 percent range, the firm said, and are expected to increase to the 60 percent level.

Rising utilization is expected to contribute to stabilized prices and even an increase in analog-monolithic in Q3, iSuppli said.

- Dylan McGrath
EE Times

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