Is It a Blip or a Signal?A recent SemiBytes report showed a bounce from inventory depletion to inventory replenishment. The question is whether the data represents a blip, or a signal that we may have reached a market bottom, or at least be approaching it? Packaging and testing houses reported significant increases in sales for the month of February 2009 in part due to rush orders from consumer electronics, communications and computer segments. This is potentially very significant news. The assembly and test services are the first indication of returned demand for chips in existing inventory and for existing designs near completion in fabs, according to Loren Lancaster, president of ESG Navigators.The Chinese governments stimulus program for domestic spending may have contributed to the rise in orders as manufacturers anticipate increased domestic demand. The package includes some less traditional moves, such as giving subsidies to rural residents to buy things like refrigerators and TV sets in an effort to increase domestic consumption.Silicon foundry business, another key indicator, showed signs of life in February as well. Chartered Semiconductor Manufacturing revised its first quarter guidance upwards. And, Semiconductor Manufacturing Co. Ltd and United Microelectronics Corp reported improvement. As the quarter is progressing, our business seems to be stabilizing with wafer starts for second quarter shipments showing increases due to additional orders from customers, compared to our view in January, said George Thomas, senior vice president and CFO of Chartered in a statement. While we are seeing this improvement in customer orders, the macroeconomic environment continues to be challenging and business visibility remains limited. It is this challenging macroeconomic environment that has some analysts calling the recent positive reports a blip. The concern is that a lack of global demand could indicate that the replenishment rebound is most likely a head fake. Neigh sayers site the lack of consumer demand for PCs, cell phones and digital cameras not to mention cars. Further, the electronics market is saturated, the world economy is in shock and no bottom appears in sight.First-quarter expectations are disappointing for many of the major chip companies. And, several analysts predict that overall semiconductor sales will drop at least 20% in 2009 from 2008s total. If they are right, this will be the largest semiconductor revenue drop since 2001s with a decline of 32%.Perhaps there will be enough sustainable consumer demand in China, post stimulus, to bring the electronic and semiconductor market back to life. That remains to be seen.
Is It a Blip or a Signal?
A recent SemiBytes report showed a bounce from inventory depletion to inventory
replenishment. The question is whether the data represents a blip, or a signal that we may
have reached a market bottom, or at least be approaching it? Packaging and testing houses
reported significant increases in sales for the month of February 2009 in part due to rush
orders from consumer electronics, communications and computer segments.
This is potentially very significant news. The assembly and test services are the first
indication of returned demand for chips in existing inventory and for existing designs near
completion in fabs, according to Loren Lancaster, president of ESG Navigators.
The Chinese governments stimulus program for domestic spending may have contributed
to the rise in orders as manufacturers anticipate increased domestic demand. The package
includes some less traditional moves, such as giving subsidies to rural residents to buy things like refrigerators and TV sets in an effort to increase domestic consumption.
Silicon foundry business, another key indicator, showed signs of life in February as well. Chartered Semiconductor Manufacturing revised its first quarter guidance upwards. And, Semiconductor Manufacturing Co. Ltd and United Microelectronics Corp reported improvement.
As the quarter is progressing, our business seems to be stabilizing with wafer starts for second quarter shipments showing increases due to additional orders from customers, compared to our view in January, said George Thomas, senior vice president and CFO of Chartered in a statement. While we are seeing this improvement in customer orders, the macroeconomic environment continues to be challenging and business visibility remains limited.
It is this challenging macroeconomic environment that has some analysts calling the recent positive reports a blip. The concern is that a lack of global demand could indicate that the replenishment rebound is most likely a head fake. Neigh sayers site the lack of consumer demand for PCs, cell phones and digital cameras not to mention cars. Further, the electronics market is saturated, the world economy is in shock and no bottom appears in sight.
First-quarter expectations are disappointing for many of the major chip companies. And, several analysts predict that overall semiconductor sales will drop at least 20% in 2009 from 2008s total. If they are right, this will be the largest semiconductor revenue drop since 2001s with a decline of 32%.
Perhaps there will be enough sustainable consumer demand in China, post stimulus, to bring the electronic and semiconductor market back to life. That remains to be seen.