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Analysts, vendors tip slow IC improvement

Posted: 11 Jun 2009 ?? ?Print Version ?Bookmark and Share

Keywords:IC recovery? semiconductor? market outlook? fabs?

Raised forecasts
Indeed, there are mixed signals among various companies. TI increased its sales and earnings targets for Q2, thanks to what an executive said was strength across many products lines, particularly analog ICs.

TI said it now expects Q2 sales to be between $2.3 billion and $2.5 billion, an improvement from earlier guidance that called for sales to be between $1.95 billion and $2.4 billion.

"TI provided a solid mid-quarter sales and EPS update, exceeding our prior estimates," analyst Doug Freedman of Broadpoint AmTech. "Utilization rates rose above initial plan as internal inventory correction is largely behind the company."

The March quarter represented a hard bottom at about mid-30 percent. "Strength in analog represents a mix shift tailwind as the analog gross margin runs above company average," he added. "TI has more room for improvement. It is shipping below end-demand levels (resales continue to exceed sell-in rates into the channel), suggesting that order trends will likely exceed seasonality in upcoming recovery quarters. Additionally, an upcoming recovery in America and Europe should provide further upside."

Others are seeing improvement. Microchip Technology Inc. provided financial guidance for Q1 of fiscal 2010 ending June 30. Net sales are expected to be up between eight to ten percent from Q4 of fiscal 2009 ended March 31.

In Q1 of fiscal 2010, earnings per diluted share on a GAAP basis are expected to be approximately 12 to 13 cents, excluding any mark-to-market adjustment on the value of our trading securities.

During its earnings conference call on May 7, Microchip did not provide any financial guidance for the quarter ending June 30, but disclosed that its internal plan for the quarter was for net sales of $182 million, or up approximately 5 percent from Q4 of fiscal 2009.

"Our total backlog position has continued to grow throughout the quarter. Both our direct and distribution businesses have performed well. Geographically, Asia has shown the most strength while Europe has been the weakest," said Steve Sanghi, Microchip's president and CEO, in a statement. "We are increasing wafer starts in our fabs as we expect to achieve quarter end inventory that approximates our internal target of 115 days."

Demand hike
Another company is also seeing renewed demand. Diodes Inc., a supplier of ASSPs within the broad discrete and analog semiconductor markets, increased its guidance for Q2 of 2009.

Due to continued improvement in demand and order rates, primarily in Asia, the company is raising its previous guidance and now expects Q2 revenue to increase 22 to 30 percent over the first quarter revenue versus the prior guidance of 14 to 22 percent.

Meanwhile, Mindspeed Technologies Inc., a supplier of semiconductor solutions for network infrastructure applications, updated to its business outlook for Q3 of fiscal 2009.

The company now expects revenues in Q3 of fiscal 2009 to be in the range of $32 million to $33 million, excluding any potential patent sales. The company's previous guidance for third fiscal quarter revenue was to be in the range of $30 million to $32 million.

The revision in guidance is attributable to strength in all three of the company's businesses, multiservice access or VoIP, high-performance analog (HPA) and WAN. The company continues to experience better than expected 3G wireless infrastructure and fiber-to-the-building customer demand in China, as well as growth in crosspoint switch solutions.

- Mark LaPedus
EE Times

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