The Philadelphia Semiconductor Index (SOX) rose from 188 to 230
in March. TSMC, the world’s leading foundry and therefore a
barometer for IC demand, increased its Q1 revenue forecast citing
renewed Chinese ordering, Texas Instruments firmed up on a
previously vague Q1 forecast, and Freescale saw markets
firming.
“We’ll be down about 15% this quarter,” Rich Beyer, CEO of
Freescale, told Electronics Weekly earlier this month,
“we’re seeing modest signs of stabilisation in individual market
areas. I feel better about where we are than I did 90 days
ago.”
“When the semiconductor recovery comes it will come quickly”,
Europe’s leading semiconductor analyst, Malcolm Penn, CEO of Future
Horizons, “and the recovery will be steep.”
On the other hand, there is talk that premium high-tech shares are
being bought simply because they’re cheap. US analyst Nicholas
Aberle said semiconductor shares: “May be approaching a near-term
fundamental bottom.”
It is reported that order push-outs are not prevalent and that
inventories are tight, meaning any upturn in end-product demand
will feed quickly through to chip orders.
Meanwhile, the biggest market for semiconductors, PCs, is looking
better than expected.
“We believe there are several reasons for improving builds in the
PC supply chain,” write Craig Berger and Robert Pikover,
semiconductor market analysts with FBR Capital Markets.
"OEMs and distributors are beginning to reorder chips after orders
ceased in November to January; inventory in mid March has largely
been worked down to hand-to-mouth levels; and demand for chips
(handsets, PCs, and white goods) is increasing in China due to its
stimulus package that included coupons and discounts for electronic
goods," said Berger and Pikover.
Then on Friday last week,
major foundries TSMC and UMC were
reported to have re-engaged all production workers at all their
12-inch wafer fabs as new orders start to lift the gloom in the
chip industry.
TSMC said first-quarter business is expected to be better than
expected. This is primarily due to orders from the mainland Chinese
market and a stronger US dollar.
Texas Instruments recently firmed up a previously vague Q1
forecast. Altera has attributed a marginally improved outlook to
better than expected demand from OEMs providing equipment for
Chinese 3G wireless networks.
There are some remarkable individual cases where market sentiment
has gone from pessimism to optimism almost over night. AMD shares
went from $2 to $3 in a fortnight in March.
Presumably this is because of AMD’s foundry strategy to off-load
its manufacturing to the Globalfoundries joint venture with
Advanced Technology Investment Co. (ATIC) of Abu Dhabi.
Not only will Globalfoundries relieve AMD of the huge cost of fab,
the deal has already resulted in AMD getting some $1.8bn in cash
and debt pay-down. Then, of course, there is no knowing what price
Globalfoundries will charge AMD for its wafers.
The markets appreciate all this.
While, during 2009, Intel’s shares have risen 1.6%, AMD’s have shot
up 28%.
That could be because Intel’s main strength hitherto – its
manufacturing capability - could become a disadvantage, as
processor prices decline with the commoditisation of the PC, while
Intel’s fab costs continue to rise.