Digital Daily » chips

Chip Industry Can Put Down the Mylanta Now

John Paczkowski — Thu, 05 Nov 2009 16:47:26 +0000

Worldwide chip sales have slipped deep into the mud over the past year and they’ll continue to do so until year’s end. But they’ll begin to improve after that. Down 11.6 percent this year at $219.7 million, global chip sales will rebound 10.2 percent next year to peak at $242.1 billion, according to the Semiconductor Industry Association. Better yet, they’ll hit $262.3 billion in 2011.

Welcome news, considering that back in June, SIA was calling for chip sales to fall 21 percent.

“The new forecast is brighter than our earlier projections, reflecting an improving global economy,” SIA President George Scalise said in a statement. “Unit sales of key demand drivers–including PCs and cell phones, which together account for about 60% of semiconductor demand–have been stronger than previously predicted. We remain cautiously optimistic for the longer term. The current forecast is closely tied to projections of continuing improvement in the worldwide economy.”

Semiconductor Industry Ends Disaster Preparedness Drills

John Paczkowski — Mon, 02 Nov 2009 18:17:25 +0000

2009 semiconductor sales are down from 2008 by nearly record amounts, but they’re improving. That’s the latest word from the Semiconductor Industry Association, which said today that global chip sales rose in September from the previous month–the seventh straight month of gains.

Third-quarter chip sales totaled $61.9 billion, down 10.1 percent from the same quarter last year, but up nearly 20 percent from the second quarter of 2009. No doubt about it, the market for chips is improving (see chart below; click to enlarge).

“Global semiconductor sales in the third quarter were above expectations,” SIA President George Scalise said in a statement. “September sales were in line with historical patterns, reflecting increased demand from end-users as they began the build for the holiday season.”

“Amid signs that we are in the early stages of recovery in the global economy,” Scalise added, “semiconductor sales continue to reflect normal seasonal patterns. Sales are running well ahead of the worst-case scenarios projected early in the year, and we are optimistic that total sales for 2009 will be better than our mid-year forecast.”

Sales are running well ahead of the worst-case scenarios? Well, I suppose any reassurance is a good one when your industry is down 10 percent year-over-year.

AMD Loss Not Nearly as Awful as Expected

John Paczkowski — Fri, 16 Oct 2009 13:36:43 +0000

Looks like AMD has benefited from the same favorable PC updraft that’s lifting Intel. On Thursday, the chip maker reported a narrower third-quarter loss than projected, thanks to “strong demand” for its microprocessors and graphics chips.

Analysts had expected AMD to lose 42 cents a share on revenue of $1.26 billion, according to a consensus survey by Thomson Reuters. Instead, the company lost 18 cents a share on revenue of $1.4 billion, which was down from $1.8 billion for the same quarter last year.

Not the sort of blow-out quarter we saw from Intel (INTC) earlier this week, but encouraging news nonetheless. Certainly, AMD’s leadership believes the company is poised for a turnaround. During a conference call to discuss AMD’s (AMD) third-quarter results, CEO Dirk Meyer offered an upbeat outlook for the remainder of 2009 despite the current loss.

“Third quarter consumer PC demand continued to improve from prior periods, with particular strength in notebooks and in China and continued recovery in Europe and in North America,” Meyer said. “And it appears the commercial IT markets are positioned to improve next year….Going forward, we believe we are well positioned to succeed.”

Intel Profit, Sales Beat Street

John Paczkowski — Tue, 13 Oct 2009 20:14:11 +0000

As the world’s largest maker of computer chips, Intel is considered a bellwether for the wider industry. So the fact that the company’s latest revenue and profit numbers handily beat expectations is a very good sign indeed.

Posting third-quarter results Tuesday, Intel (INTC) said it earned 35 cents a share on revenue of $9.39 billion. That’s not quite what the company reported during the same period last year, when it saw earnings of 35 cents a share on revenue of $10.2 billion. But it’s much better than investors had been hoping for. Analysts had expected Intel to report earnings of 28 cents a share on revenue of $9 billion, according to a consensus survey by FactSet Research.

Not bad. Even better, the company bumped up its fourth-quarter guidance from sales of $9.7 billion to sales $10.6 billion. Consensus estimates have been calling for sales of $9.5 billion, according to FactSet Research data.

Intel’s rosier Q4 guidance suggests that the slow increase in end-market demand for PCs we’ve been seeing lately isn’t simply inventory refill but reflects an upswing in demand for end-customer goods. Perhaps that turnaround CEO Paul Otellini has been heralding for the last half year is not as far off as it might seem.

“Intel’s strong third-quarter results underscore that computing is essential to people’s lives, proving the importance of technology innovation in leading an economic recovery,” Intel CEO Paul Otellini said in an earnings release. “This momentum in the current economic climate, plus our product leadership, gives us confidence about our business prospects going forward.”

Dell Buys Perot

John Paczkowski — Mon, 21 Sep 2009 17:15:27 +0000

[ See post to watch video ]

The Chips Are Up

John Paczkowski — Mon, 31 Aug 2009 19:24:10 +0000

Could the global semiconductor industry be heading for a much anticipated recovery? It’s starting to look that way. Chip sales rose in July for the fifth consecutive month on a month-to-month basis, according to the trade group, Semiconductor Industry Association. Which is not to say sales are robust; down 18.2 percent year-over-year, they’re abysmal, but they are showing continuing signs of recovery.

“The fifth-consecutive month of sequential increases in semiconductor sales reflects improving demand in the consumer sector,” SIA President George Scalise said in a statement. “Sales of consumer products such as netbook PCs and cell phones are supporting the modest recovery in demand that is now under way. Purchases of Information Technology products by the enterprise sector continue to be tempered by caution and longer replacement cycles. There is also evidence of a return to seasonal industry patterns.”

Great news, coming as it does after the chip industry’s seemingly endless procession of bad. Certainly, it’s reassuring that the SIA sees “evidence” of a return to normal sales patterns, even if they are at a lower level. The semiconductor sector is typically among the first industries to recover ahead of a broader market turnaround. This latest report suggests we may be at the beginning of just that or at least at an inflection point where the uncertainty in consumer and enterprise technology markets that’s been such a drag on the industry begins to abate.

Apple Inks Chinese iPhone Deal

John Paczkowski — Fri, 28 Aug 2009 18:00:19 +0000

[ See post to watch video ]

Q2 Chip Sales Not Too Horribly Awful

John Paczkowski — Mon, 03 Aug 2009 15:40:08 +0000

Looks like the semiconductor industry has finally found a bottom from which to scramble upward.

In the second quarter, chip sales registered their fourth consecutive monthly increase, the Semiconductor Industry Association said today, suggesting that we may be seeing the beginning of a gradual recovery in the industry. Though worldwide chip sales fell 20 percent year-over-year in the second quarter, they rose 17 percent from the first quarter. And June sales, which totaled $17.2 billion, were 3.7 percent higher from May (click on chart to enlarge).

The chip market is still lousy, but it’s clearly improving. Said SIA President George Scalise: “The fourth-consecutive monthly increase in sales is one indicator the industry is returning to normal seasonal growth patterns.”

Scalise added that focused supply chain management by both producers and customers has done much to temper the impact of the econalypse on the industry. “Inventories have been closely managed, encouraging us to believe that the sequential increase in quarterly sales represents a gradual recovery of demand,” he added.

Intel Inside Nokia Someday

John Paczkowski — Tue, 23 Jun 2009 15:42:06 +0000

“We would love dearly to win one of the big guys, that really is the smartphone game, it really is a concentrated set of suppliers,” Intel CFO Stacy Smith told Bloomberg earlier this year. “We’re lurking behind every bush and showing them our product line.”

Well, the ambushes to which Smith referred appear to have finally paid off: Intel (INTC) has landed a deal to develop chips with Nokia (NOK).

During a conference call this morning, Intel senior mobility VP Anand Chandrasekher announced a deal that will see the two companies developing something they ambiguously describe as a “new mobile platform beyond today’s smartphones, notebooks and netbooks.” Under its terms, they will work together on several open-source mobile Linux software projects and Intel will license Nokia’s high speed packet access technology.

“This Intel and Nokia collaboration unites and focuses many of the brightest computing and communications minds in the world, and will ultimately deliver open and standards-based technologies, which history shows drive rapid innovation, adoption and consumer choice,” Chandrasekher said in a statement. “With the convergence of the Internet and mobility as the team’s only barrier, I can only imagine the innovation that will come out of our unique relationship with Nokia. The possibilities are endless.”

The deal is a big win for Intel, whose last dalliance with the cellphone market ended in ignominy. The computing landscape is shifting from PCs to mobile devices and Intel must shift along with it in order to grow its business. And right now, 90 percent of its sales are PC-related. With the global market for cellphones at 1.2 billion units per year and growing, according to ABI Research, the chipmaker must figure out a way to dominate cellphones the way it has PCs. Allying with Nokia is one way of achieving that. But when will we see the first Intel-powered Nokia device? Intel and Nokia won’t say. “This is about technology collaboration and a licensing agreement,” Chandrasekher said in reply to repeated questions on the matter. “We are not commenting on specific products today, I’ll leave it at that. When we are ready to talk about products, we will.”

Incidentally, Nokia CEO Olli-Pekka Kallasvuo was a speaker at our D7 conference. A video highlights reel of his appearance, below.

[ See post to watch video ]

April Chip Sales Less Awful Than Usual

John Paczkowski — Mon, 01 Jun 2009 15:26:15 +0000

A bit of good news today amid the chip industry’s seemingly endless procession of bad.

Sales of semiconductors rose 6.4 percent globally from March to April to $15.6 billion, according to the latest metrics from the Semiconductor Industry Association (click on the chart below).

But at $15.6 billion, they were still about 25 percent below the $20.9 billion reported last April. So while a better month than March, April is still a tremendous disappointment–although the SIA is hoping it signals a return to normal sales patterns, albeit at a lower level.

“The better-than-expected 6.4 percent sequential increase in April sales was driven by moderate improvements in a number of end-demand drivers and inventory replenishment,” said SIA President George Scalise. “The PC market–a major consumer of semiconductors–has been stronger than predicted earlier in the year.”

Good news for chip vendors like Intel (INTC) and AMD (AMD), right? One question, though: Since when is inventory replenishment growth?

Intel to Change "Sponsors of Tomorrow" Slogan to "Sponsors of the European Union"

John Paczkowski — Wed, 13 May 2009 10:59:40 +0000

Ouch.

European regulators slapped Intel with an antitrust fine and, as expected, it’s a large one–a record $1.45 billion, which dwarfs even the $1.2 billion fine levied against Microsoft in 2008. The largest ever assessed for monopoly abuse, the fine follows charges that Intel (INTC) abused its market dominance by illegally inducing PC manufacturers to use its chips over those of rival AMD (AMD).

“The Commission finds that Intel did not compete fairly, frustrating innovation and reducing consumer welfare in the process,” Neelie Kroes, the European Commissioner for Competition Policy, said at a news conference announcing the fine. “Given that Intel has harmed millions of European consumers by deliberately acting to keep competitors out of the market for over five years, the size of the fine should come as no surprise.”

And after all, it could have been worse. The $1.45 billion assessment is quite a bit less than the maximum fine the EC could have levied–10 percent of a company’s annual revenue. Given that Intel made $37.6 billion in 2008, the EC could have slapped it with a penalty of $4 billion.

Intel denied any wrongdoing and said it would appeal. “Intel takes strong exception to this decision,” CEO Paul Otellini said in a statement released immediately after the announcement. “We believe the decision is wrong and ignores the reality of a highly competitive microprocessor marketplace–characterized by constant innovation, improved product performance and lower prices. There has been absolutely zero harm to consumers. Intel will appeal. We do not believe our practices violated European law. The natural result of a competitive market with only two major suppliers is that when one company wins sales, the other does not.”

AMD Gaining on Intel, and No, I’m Not Joking

John Paczkowski — Tue, 12 May 2009 22:00:14 +0000

Well, look at that. Floundering though it is, AMD has managed some gains in the semiconductor market. According to IDC, the company’s share of the chip market hit 22.3 percent during the first quarter of 2009, an increase of 4.6 percent over the fourth quarter of 2008. Meanwhile, Intel’s share fell to 77.3 percent, a decline of 4.7 percent.

It would appear that Intel’s loss is, for the most part, AMD’s gain. Intel’s (INTC) shipments declined 16 percent while those of its rival increased 13 percent. Great news for AMD (AMD), which has been having a rough time of it lately with more than two fiscal years of losses and little sign of an upturn.

And what of the broader chip market? IDC says it remains weak, but believes a bottom may be in sight. Overall, shipments were down, but their rate of decline appears to be slowing. During the first quarter, world-wide shipments fell 10.9 percent from the fourth quarter of 2008. That’s not nearly as bad as their 17 percent decline from the third quarter to fourth. So the good news here in that the bad news could have been worse. Says IDC: “The PC processor market is still in weak condition. While OEM demand picked up notably towards the end of the quarter and going into April, IDC is wary that the demand was due to OEMs replenishing their inventories rather than reflecting a return of solid end demand and return to market normalcy. IDC continues to expect modest sequential processor unit shipment decline in 2Q09.”

Apple to Manufacture Single 100 Million Gigabyte iPhone?

John Paczkowski — Thu, 09 Apr 2009 18:52:50 +0000

To the NAND flash memory business, Apple is a market maker and mover–and an increasingly insatiable one. The company first shook the NAND industry back in 2005 when it arranged to purchase up to 40 percent of Samsung Electronics’ holiday NAND output for use in it iPods. In 2008 it did so again, reportedly buying up 50 million 8GB-equivalent NAND flash chips from Samsung, an amount so large the company was forced to reduce its supply to other customers to fulfill its obligation to Apple (AAPL).

Now comes word that the company’s appetite has been renewed–and doubled. Industry sources tell DigiTimes that Apple has placed an order for 100 million 8Gb (1 gigabyte) chips from Samsung, an order so large it is reportedly causing a supply shortage. If correct, the DigiTimes report could lend a bit of credence to rumors of a low-end iPhone. Unless, of course, Apple plans to use them for something else entirely, (a single, massive 100 million gigabyte iPhone?)–also a distinct possibility.

Either way, contract prices for flash memory are likely to rise to unpleasant levels in the near future.

Sanyo Earnings Unable to Hold a Charge

John Paczkowski — Tue, 24 Mar 2009 13:05:54 +0000

More ugly news from the Japanese electronics industry today. Sanyo Electric, the world’s largest producer of rechargeable batteries, this morning slashed its earnings forecast for the second time in as many months. The company, which is set to be acquired by rival Panasonic (PC), had expected to break even for the year ending this month. But the econalypse forced it to adjust even that tame forecast. Sanyo now expects to post a net loss of $920 million for the year. “We were hit by a sharp decline in earnings at our rechargeable-battery, chips and electronic-component businesses in the fourth quarter,” Sanyo VP Koichi Maeda, explained. “We expect the tough business environment to remain through the first half of the next fiscal year.”

Chip Sales Slow in Tent City

John Paczkowski — Mon, 02 Mar 2009 15:30:09 +0000

January is historically a relatively weak month for the semiconductor industry, so the fact that the industry suffered a decline in world-wide sales last month isn’t unusual or shocking. Sadly, the same cannot be said for the depth of that decline, which was nothing short of grotesque.

World-wide semiconductor sales fell 29 percent in January to $15.3 billion, compared to the year-earlier period, the Semiconductor Industry Association said Monday. A precipitous drop and one that was felt across the entire range of semiconductor products–computers, cars cellphones and whatnot.

And that is grim news indeed. Because the semiconductor sector is typically among the first industries to recover ahead of a broader market turnaround. This latest report suggests a recovery is likely much farther off than we’d hoped.