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Forecast: Good, bad signs for 2010 electronics biz

Posted: 28 Dec 2009 ?? ?Print Version ?Bookmark and Share

Keywords:electronics? marketplace? NAND? DRAM? solar cell?

2009 started off bad, but the year currently seeing some positive signs. Thankfully, the semiconductor industry is seeing a recovery. But what about 2010? Heading into 2010, there are both good and bad signs in the marketplace. Here's what various analysts think:

Good signs
1. Seasonal demand for ICs is better than expected.
Craig Berger, an analyst for FBR, said: "Recent checks with Asian chip distributors suggest their Q4 chip shipments should fall 4-to-8 percent sequentially, better than our month-ago checks of minus 10 percent sequentially, driven by strong industrial, consumer and smart phone chip orders in November. Specifically, mid-single-digit month-over-month growth in November was better than our forecast of a mid-single-digit month-over-month decline as a robust Golden Week holiday required downstream OEMs to place rush orders for Christmas and provided confidence to begin placing orders for Chinese New Years (mid-February)."

2. Increased guidance. Companies are raising guidance, such as Altera, Amkor, AuthenTec, Fairchild, IR, Vishay, Xilinx and others. Berger said: "For Q4, we believe Atmel's revenues are tracking at or above the high end of guidance of $327 million to $340 million (3-to-7 percent up sequentially), better than the consensus estimate of $335 million."

3. Demand to pick up in 2010. Doug Freedman, an analyst at Broadpoint AmTech, said: "In the near-term we are bullish on electronic equipment unit demand (minus 5-to-10 percent in 2009, plus 15-to-25 percent in 2010); however, this is offset by our bearish view on terminal growth rates. We believe 5- and 10-year CAGRs will be 5 percent versus more bullish consensus estimates of 8-to-10 percent." We believe overall long lead times and lean inventory throughout the supply chain continue to help drive above-seasonal results in Q4 and Q1 guidance. We also believe Q2 10 shipment results are likely to be above seasonal with a return to normal or below normal seasonal patterns in Q3 10 and Q4 10."

4. PCs up in 2010. Freedman said: "MPUs should benefit from notebook and server unit strength. We believe notebook unit growth will be above 20 percent y-on-y expectations and may exceed 25 percent y-on-y. We expect server MPU ASPs and units (13 million units) will drive improved margin mix."

5. DRAM rebound? Andrew Norwood, an analyst at Gartner, said: "Gartner expects January 2010 pricing to be down for DDR2 as demand continues to reduce and supply, especially from Taiwan, increases. DDR3 pricing is harder to predict and will, at best, remain flat or else see small price declines. A return to mild pricing declines in the contract market will be a good thing, as DRAM content in PCs is already above 10 percent of BOMs (a historic pressure point for PC OEMs) for high-end and midrange machines. Pricing easing during the next few months will allow PC OEMs to slowly increase the gigabyte content of their PC lines and therefore create a healthy demand environment in 2010, which will in turn soak up the increasing capacity in the 2H 10 that comes from the move to 40nm technology by the major vendors."


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