Mixed signals seen in semis

SAN JOSE, Calif. &#151 There are mixed signals in the semiconductor market — based on finanical reports and analyst comments on Diodes, Micron, Nvidia and TI.

Overall, NAND flash is picking up, while DRAMs are still soft. PC-based chip sales are stronger than expected, while analog is a mixed bag.

Analysts are upbeat despite the mixed signs. “Q3 is looking better than what we thought,” said Bill McClean, president of IC Insights Inc. (Scottsdale, Ariz.). “Microprocessors are picking up. NAND pricing has picked up and DRAMs have stabilized.”

Worldwide fab-utilization rates, which are another indicator, are projected to hit about 93 percent in the third quarter, he said. This compares to 78 percent in the first quarter and 90 percent in the second period, he said.

Recently, Gartner Inc. (Stamford, Conn.) raised its IC growth forecast to 3.9 percent in 2007. In May, Gartner lowered its 2007 worldwide semiconductor forecast to $269.2 billion, a 2.5 percent increase from 2006.

Gartner raised the IC forecast amid improved market conditions for NAND flash, DRAMs and processors. Thanks to Apple's iPod rollout, the research firm recently raised its NAND flash revenue forecast to more than 20 percent in 2007. Gartner sees the DRAM market growing 1.4 percent in 2007 and falling 6.3 percent in 2008.

Meanwhile, some chip makers are doing better than others. On Wednesday (Sept. 13), Diodes Inc., a supplier of discrete ICs, increased its revenue guidance for the third quarter of 2007.

The Dallas-based company now expects record third quarter revenue with sequential growth of 8 to 10 percent, as compared to the previously provided guidance of 6 to 9 percent.

Earlier this week, Texas Instruments Inc. (Dallas) narrowed its guidance. TI's ''management suggested that conditions are tracking very consistent with expectations at the start of the quarter noting that orders were up quarter to date relative to the previous quarter and book-bill is above 1.0,'' said John Barton, an analyst with Cowen and Co. LLC (New York), in a report.

''While the company continues to gain visibility into 4Q '07, management noted customers are not extending backlog as lead times remain relatively short,'' Barton said. ''The company has yet to see any restocking of distributor inventory levels.''

There is more good and bad news for TI. ''Management noted that its high performance analog (HPA) business continues to be one of the primary sources of growth for the company,'' he said. ''Similarly, the company noted broad based strength across the computing end, which is consistent with the commentary we have heard over the past several weeks.''

Wireless is a mixed bag. ''While the company expects sequential growth in its wireless, management acknowledged that results were mixed depending on the customer,'' he said. ''Management obviously would not divulge the customer, but we continue to believe that Motorola's business is likely to be roughly flattish on a sequential basis. Finally, management noted that DLP business continue to be impacted by slower than expected growth in front projectors which should result in sales roughly even with 2Q '07 (June) levels.''

On the memory side, it's a mixed bag. Micron Technology Inc.'s ''near-term pricing down, though long term promising,'' said Daniel Amir, director and senior research analyst for semiconductors at Lazard Capital Markets.

''We expect ASPs to be down in the second half of September by 5 percent verses the first half of the month,'' he said. ''However, as we look into 1H '08 we expect a rebound in DRAM pricing. Micron was positive on the outlook of supply-demand balance in 2008. We believe an image sensor spinout is likely.''

On the PC side, the market is upbeat for some, including Nvidia Corp. ''The company remained upbeat about PC demand and sell-through during the October quarter,'' said analyst Doug Freedman of American Technology Research Inc..

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