EE Times - August 6, 2007 - (Page 22) Business Chip supplier ranks get roil treatment www.eetimes.com By John Walko Though there has been little movement among the top 10 semiconductor suppliers during the first half of 2007 compared with 2006 rankings, research group IC Insights says there have been significant changes in the ranking among the next 10. IC Insights attributes the shakeup among the top 20 suppliers primarily to the recent collapse in DRAM prices. The biggest change has been the position of Freescale Semiconductor, which dropped from its ranking as the ninth-largest semiconductor supplier in the world in 2006 down to 16th in first-half 2007. Freescale, with sales of $2.6 billion in first-half 2007, has been feeling the pain of its biggest customer, Motorola, whose share of mobile phone unit shipments dropped from 23 percent in second-quarter 2006 (51.9 million units) to 14 percent in second-quarter 2007 (35.5 million units) . Conversely, Qualcomm ($2.62 billion in sales) gained four positions, moving to 13th in first-half 2007. Qualcomm came in only $17 million behind 12th-ranked Infineon ($2.64 billion) in terms of revenue. IC Insights projects Qualcomm is on track to increase semiconductor sales by 25 percent for all of 2007, compared with 2006, but says the company’s legal issues with Broadcom could influence results. NXP Semiconductor ($3 billion) saw its “steady if unspectacular performance” move it into the top 10 in first-half 2007 after being ranked 11th in 2006, according to IC Insights. STMicroelectronics ($4.7 billion) dipped one spot to fourth, while Toshiba ($5.7 billion) climbed up one position. The other major European player, Qimonda ($2.3 billion), fell three positions in the rankings, due to DRAM price wars, according to IC Insights. Not surprisingly, Intel ($15.9 billion), Samsung ($9.2 billion) and Texas Instruments ($6.3 billion) retained the top three positions over the period. The bigrecorded the highest sales increase from first-quarter to second-quarter 2007 (17 percent) of the top 20 suppliers and raised its capacity utilization rate to more than 94 percent, from 83 percent, during Although dropping two positions in the ranking to 15th, AMD ($2.6 billion) saw sales increase by 12 percent between the first and second quarters of 2007. As part of its continuing MPU market share battle with Intel, AMD is expected to announce a major manufacturing/foundry deal in the second half of 2007, according to the research group. IC Insights said the poor secondquarter performance of many of the major memory suppliers are indicative of the DRAM price collapse and competitive flash memory market in the first half of the year. Toshiba, Hynix ($4.6 billion), Qimonda and Elpida ($2.1 billion) were especially hard hit, each registering a sales drop of more than 20 percent between the most recent first and second quarters. The researcher noted, however, that all of these companies expect a rebound in sales in the second half of the year, with Toshiba projecting a 20 percent increase in sales in the current third quarter. Despite weak DRAM prices, Hynix moved from seventh to sixth place in the ranking, while another big DRAM supplier, Elpida, gained four positions, rising from 23rd in 2006 to 19th in the most recent first half. Looking to the near term, IC Insights expects to see pricing stability return to the DRAM and flash memory markets in the second half, surging IC demand for high-end cellular phones, and a noticeable seasonal rebound in overall IC demand beginning in September. These factors, combined with the very tight grouping of the companies ranked 12th through 16th on the list (there was only a $38 million difference in sales between them), are likely to cause significant changes in the top 20 semiconductor ranking in the second half of 2007, according to IC Insights. ■ prior three-month period. The problem for many EMS companies is that OEMs are still reluctant to accept inventory liability, even as they demand swifter response to market changes. In order to keep certain contracts and help their customers meet any unforeseen demand spikes, EMS companies are forced to hold more inventory than they would normally, said Thomas Weisel’s Sheerin. “We continue to believe there is still inventory to work down in EMS [particularly at the top five], but acknowledge that the inventory levels carried by EMS [providers] as a whole will likely be higher than in previous years, as OEMs push back on the supply chain,” Sheerin said. ■ gest foundry in the list is TSMC ($4.2 billion), which placed seventh in the first half of this year, down one spot from the position it held throughout 2006. This, despite the fact that the Taiwanese group executives declined to offer much guidance for the third quarter, despite repeated pressure from analysts. “Let me be really clear. I don’t want to be, and I am not going to be, forecasting quarterly revenues and profit during this call,” said Michael Lehman, chief financial officer of Sun. “We all are looking at the U.S. economy and looking at what is going on in the markets and trying to understand what the impact is on capital spending and how that relates to our customers.” EMS problem Since the major industry downturn of 2001—and in the last few years in particular—OEMs in the electronics industry have increasingly been transferring that time period. Spurred by increasing internal transfers for PS3 game machines, Sony ($3.3 billion) moved up one spot in the top 10 and now occupies ninth. ownership of components to suppliers. Many component makers have gladly assumed this financial responsibility in part so they can gain greater visibility into customer demand and improve their supply-and-demand strategies. EMS companies, too, which initially tried to muscle in on the turf of component distributors by marketing themselves as end-to-end supply chain solution providers, have yielded control over inventories to suppliers. That strategy, however, seems to be unraveling because of problems at many of the leading EMS companies. Thomas Weisel reported that days of inventory outstanding at the leading EMS providers dropped slightly, to 51, in the second quarter after climbing to 53 in the <<21 INVENTORY er, Intel Corp., saw inventories rise The group as a whole (Intel, Samsung, TI, Toshiba, ST, Hynix, NXP, Micron and AMD) cut their combined second-quarter inventory level to $20.4 billion from $22.2 billion in the first quarter and from $21.4 billion in the last quarter of 2006. While these numbers may seem impressive, caution still reigns in the market because industry executives appear to lack visibility when it comes to endequipment demand, which makes inventory and production management difficult. Many company executives aren’t even willing to speculate on demand trends for the second half of the year. At Sun Microsystems Inc., for instance, 22 Electronic Engineering Times | August 6, 2007 http://www.eetimes.com
For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.