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Fabless sector trumps rest of chip industry

Posted: 04 Jul 2012 ?? ?Print Version ?Bookmark and Share

Keywords:fabless? semiconductor industry? IC market?

According to the Global Semiconductor Alliance the fabless sector outperformed the overall semiconductor industry in 1Q12. This is stated in the market analyst's June release of its Current Economic Monitor.

The semiconductor industry and its sales leaders yielded negative quarter-over-quarter (QoQ) and year-over-year (YoY) sales growths in 1Q12, according to the report. While the fabless segment and its sales leaders followed the same trend QoQ with a 4 percent drop, the sector achieved positive sales growth YoY of 1.2 percent. Taking into consideration only the top 20 fabless companies, they achieved combined sales of $13.3 billion, a 2.7 percent decrease QoQ but an 8.6 percent increase YoY.

An average gross profit margin of 37.7 percent was achieved by the 164 fabless and IDM companies that publicly reported 1Q12 gross profit margins. Eighty-eight companies reported a 1Q12 gross profit margin higher than the average, 85 percent of which were fables companies. The profit is seen as indicative that over 50 percent of the companies were successful in their initiatives to cut costs and are able to sustain growth over timea good sign for the market.

The average net profit margin of the 166 fabless and IDM companies that publicly reported Q1 12 net profit margin was -14.4 percent, indicating that the industry might be having a difficult time controlling costs. The average net profit margin of the 98 companies that reported a positive margin was 12.1 percent. Thirty-nine companies reported a 1Q12 net profit margin higher than the 12.1 percent average. 92.3 percent of these companies were fabless.

Also, of 144 fabless and IDM companies that publicly reported 1Q12 free cash flow, 82 companies reported a positive cash flow, indicating that over 50 percent are building their cash reserves and are able to develop new products, acquire companies, reduce debt, enhance shareholder value and grow into the future. Of these companies, 79.3 percent were fabless.

- Julien Happich
??EE Times

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