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Will IC market recovery continue until Q4?

Posted: 25 Sep 2009 ?? ?Print Version ?Bookmark and Share

Keywords:IC market recovery? silicon wafer? semiconductor? manufacturing?

The IC market may be recovering but will there be a sustained uptick or another dip, especially in the Q4 09? At present, there are mixed signals in the market.

"The second quarter growth was the highest in at least 15 years and all indications point to a third quarter that will also be booming and looks like it will surpass our forecast," said Jim Feldhan, president of Semico Research Corp. "We talked a number of weeks ago about a minus 12 percent year (in terms of an IC forecast for 2009). It is now looking like minus 10 percent is in the cards."

In this article, I list two negative data points and two positive ones.

Here's two negative data points:

1. Gartner Inc. has raised its forecast for silicon wafer demand in 2009, but Q4 looks soft.
In total, silicon wafer demand will decrease by 23 percent in 2009 over 2008, according to Gartner. This compares to the previous forecast, which called for a 30 percent drop, according to the firm.

"Silicon wafer demand for semiconductor production, which showed a significant 79 percent rebound in the second quarter of 2009, will undergo some softening in the fourth quarter due to the resurgence of moderate production cutbacks," the firm said.

"We believe that wafer demand after the third quarter will be driven largely by actual demand that comes from device production recovery," according to the firm. "However, wafer demand in the third quarter will maintain growth of about 12-to-13 percent because seasonal demand will continue in the device industry. In the fourth quarter, however, some softening will be seen due to production cutbacks caused by the end of this seasonal demand. In particular, there is concern about the decline in demand from Taiwanese foundries, which have led this year's recovery."

2. Wafer production at Qualcomm Inc. worsened in the past month at two of the firm's major foundries, according to FBR.

"While Qualcomm's Q3 production checks improved and we believe are set to grow by (plus) 13 percent quarter-over-quarter (better than our month-ago checks of plus 10 percent quarter-over-quarter), we believe the firm's Q4 production checks worsened and are now set to decline by 18 percent quarter-over-quarter (worse than our month-ago checks of minus 10 percent)," according to FBR.

"We note two caveats: (1) the steeper production decline occurred at Qualcomm's smaller foundry located in China, and (2) Qualcomm initially cut production builds earlier in Q3 before ultimately raising them later in the quarter," according to the firm.

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