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IC forecasts: What keeps analysts bullish, worried

Posted: 22 Mar 2010 ?? ?Print Version ?Bookmark and Share

Keywords:IC market? automotive? LCD? baseband? solar cell?

"The 2010 economic recovery will bring rising sales of PCs," said Fang Zhang, analyst for storage systems at iSuppli. "The notebook sector is expected to be particularly strong, with shipments outgrowing those of desktops. This will drive the robust increase in HDD shipments."

Global IT expenditure is expected to rise slightly this year for the first time since the onset of the global economic downturn, according to industry analyst Ovum. "A survey of IT decision makers revealed that one third expect their budgets will increase in 2010. Despite this cautious optimism, there are signs that CIOs do not yet view IT as an engine for growth and that 2010 will mostly be a year of reckoning," according to the firm.

New and low price points for LCD TVs. 3D TVs are coming. DisplaySearch raised its 2010 LCD TV unit forecast from 171 million units to 180 million units.

"Avian's latest monthly survey of smart phones sell-through indicates continued outperformance in penetration versus the overall handset market," said Dunham Winoto, an analyst with Avian Securities LLC, in a report.

MEMS microphone technology has grown from less than 1 percent of the 1.2 billion microphones sold worldwide in 2003 to 20.1 percent of the 1.7 billion microphones sold in 2009, according to The Information Network. In 2010, MEMS microphones will reach 25.5 percent of the worldwide microphone market, as shipments increase 35 percent to nearly 500 million units.

Why I'm worried? "PC build checks downtick slightly as China labor shortages impact desktop builds. Interim update on Q1 PC builds with top five notebook ODMs and top four desktop motherboard makers is slightly worse than our month ago checks," according to FBR.

"LCD TV sales slightly missed expectations, or there was slightly too much inventory in channel. The one area we heard a bit of choppiness was for large sized LCD TVs, where sales fell slightly short of elevated expectations, or where there was slightly too much inventory in the channel, depending on whom one believes. AUO possibly reduced TV panel forecast slightly for Q1," according to FBR.

According to WitsView's latest survey, global large-sized panel shipments fell by 12 percent to 44.34 million units in February 2010. The decline was mainly due to the effect of Chinese New Year holiday. Second, this year, China faces serious labor shortage problems both before and after the holiday. Tight supply of several panel components, such as polarizers and ICs, continued.

"The LED market phenomena reminds us a bit of the excitement in the solar space a few years back, which ended badly after polysilicon spot prices hit as much as $400/kilo in early 2008; today's prices are sub-$50. Supply dynamics matter, perhaps even in LEDs," said Hans Mosesmann, an analyst with Raymond James.

4. Capex boom
Why I'm bullish? Semiconductor capital spending is hot. Fab-tool spending is up. One vendor, Novellus, is seeing demand. "We expect (Novellus') management to tighten March quarter guide to the high end of the range with likely upside to bookings, possibly aided by Samsung pull-ins," said C.J. Muse, an analyst with Barclays Capital. "Note that spending is led by Samsung (both Korea and Austin), TSMC, Intel and, to a lesser extent, Nanya/Inotera, UMC, Hynix, and Global Foundries."

MOCVD demand is hot for new apps like LEDs. "We believe MOCVD tool demand is still mainly driven by demand for LED backlighting in TVs, notebooks, and computer monitors. We believe incremental LED orders are mainly coming from Taiwanese and Chinese players and Samsung. Specifically in Taiwan, Epistar, AUO, and Chimei are placing tool orders. These companies are mainly targeting the backlighting market," said Daniel Amir, an analyst with Lazard Capital Markets.

"In China, San'an, Lattice, and GPI are smaller players that are mainly targeting general illumination. Samsung is targeting both backlighting and general illumination. In the U.S. market, LEDs for general illumination continue to slowly gain traction in certain areas such as outdoor/ street/parking lot lighting, and in retail and hospitality," he said.

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