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Analog vendors face shortages, extended lead times

Posted: 05 May 2010 ?? ?Print Version ?Bookmark and Share

Keywords:analog market? shortage high demand? fab?

Analog chipmakers continue to wrestle with part shortages and extended lead times, according to an analyst. And in some cases, vendors must turn away business because they cannot meet strong customer demand. Maxim, MPS, Power Integration and others are in that boat

Earlier this year, analog, memory, logic and other IC vendors began to see huge demand, prompting shortages for select parts and extended lead times.

There are still problems in the channels in analog. "Stretched lead times have taken center stage as the investment community tries to accurately forecast revenue based on many moving pieces: distribution sell-through, capacity constraint alleviation, 'turns' divination, backlog, delinquencies, etc.," said Vernon Essi, an analyst with Needham & Co. LLC, in a report.

Texas Instruments Inc. posted its results, which "beat consensus expectations for both revenue and EPS," Essi said. "Lead times (for TI) continued to improve and were generally about four weeks lower, now ranging in the 12-14 week time frame, down q-on-q from 16," he said.

But to meet future demand, TI is expanding its 300mm analog fab. As reported, TI last year opened a 300mm analog semiconductor fab in Richardson, Texas. TI's new analog facility, dubbed RFAB, will be the first analog chip fab to use 300mm wafers. TI had already moved to equip the fab by buying $172.5 million worth of chip production equipment from Qimonda AG's fab in Sandston, Va.

Maxim Integrated Products Inc. posted sales and EPS of $509 million and $0.27 verses consensus of $513 million and $0.27.

"No surprise that lead times are extended and Maxim, like its peers, is trying to boost capacity and manage a burgeoning backlog," Essi said.

"In order to address capacity constraints Maxim is taking multiple actions including: hiring fab operators to increase output from internal fabs, adding equipment at internal fabs to optimize existing production lines and increasing loading to foundry partner Epson," he said.

"This will free up $50-to-70 million in incremental revenue generating capacity in September Q1 and again in December Q2," he said. "Management estimates that it left upwards of 10 percent of revenue on the table in March Q3 and June Q4 (about $51 million and $56 million) as a result of not meeting its customer's orders."

Last week, fabless analog vendor Monolithic Power Systems Inc. (MPWR) posted strong results. MPWR reported strong Q1 revenue and earnings and guided Q2 revenue 9 percent above consensus

"Like most of its peers, MPWR's lead times are extended and it was unable to build channel inventory to a normalized level and did leave revenue opportunities on the table," Essi said. "Lead times have stretched to 8-12 weeks, twice the normal level of 4-6. Management believes there are no incidences of double ordering and scrubs it backlog for potential signs of this occurrence."

Another fabless vendor, Power Integrations Inc., posted its results last week. It reported Q1 revenue in line with expectations, but the firm missed the $0.52 consensus EPS by $0.03.

"Despite record bookings and new product developments investors will be focused on stretched lead times and an inability for distributors to build sufficient levels of inventory to serve the end customer needs," Essi said. "This constraint is due to having an inefficient mix of the appropriate parts that are needed as opposed to manufacturing constraints."

- Mark LaPedus
EE Times

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