FOCUS: European Semicon Cos More Optimistic For Next Qtr
July 29 2009 - 11:29AM
Dow Jones News
European microchip makers reporting Wednesday were more upbeat
about prospects for the next quarter, joining a growing chorus of
companies in the segment that have called a bottom to the slump
that has blighted the segment for many months.
Still, doubts remain over whether a genuine recovery in demand
is imminent, or whether restocking by distributors that have drawn
down inventory rather than buying new products masks continued weak
consumer demand.
Germany's Infineon Technologies AG (IFX.XE) Wednesday posted a
13% increase in third-quarter sales compared with the second
quarter and narrowed its net loss significantly to EUR23 million
from EUR258 million a quarter prior fueled by stronger demand from
mobile handset producers like LG Electronics Inc. (066570.SE) and
Apple Inc. (AAPL) and cost cutting.
Infineon said it expects to improve sales further in the current
fourth quarter, underpinned by growth in its automotive, industrial
and multimarket segments. Analysts cautioned that in these segments
any improvement was more likely based on restocking, which could
stop abruptly if consumer demand fails to pick up. Still, they said
the wireless segment should continue to be supportive. Increasing
demand for smartphones, mobile handsets with PC-like functions, has
remained a growth area in a global handset market set to shrink by
10% this year, as Apple continues to blaze a trail with its latest
iPhone, spawning a host of rival devices.
Swiss-based STMicroelectronics NV (STM), meanwhile, late Tuesday
posted its sixth consecutive quarterly net loss as sales and
margins continued to decline, but Chief Executive Carlo Bozotti
Wednesday said he expects the chip market as a whole to decline
less than previously forecast.
"Given the indicators of improvement we have observed, we expect
the market to drop about 20% this year and I clearly expect STMicro
to do better than the market," Bozotti told reporters in a
conference call. He previously forecast the overall semiconductor
market to drop about 25% in 2009.
STMicro Tuesday reported a loss of $318 million in the second
quarter, including a restructuring charge of $86 million, compared
with a prior-year loss of $47 million.
Revenue fell 17% to $1.99 billion. For its third quarter, the
Swiss-based chip maker expects revenue of between $2.07 billion to
$2.27 billion and a gross margin of about 31%.
U.K. based microchip designer ARM holdings PLC (ARM.LN) joined
the rollcall of cautiously optimistic semiconductor companies
Tuesday when it confirmed full year guidance and said improvements
in the industry would lead to better trading in the second half of
the year.
ARM reported flat second quarter sales of GBP65 million as the
dollar eased against sterling, but in dollar terms sales fell 18%
to $105.5 million, outperforming a 30% decline in the wider
industry.
ARM's designs are manufactured into microchips by companies like
Texas Instruments Inc. (TI) and Qualcomm Inc. (QCOM), and are
present in a wide range of consumer electronic goods such as
smartphones from Nokia Corp (NOK), handheld gaming devices such as
Nintendo Co Ltd's (NTDOY) DS console, and music players such as
Microsoft Corp.s (MSFT) Zune.
Dutch semiconductor equipment maker ASML Holding NV (ASML.AE)
which kicked of European semiconductor earning season mid July,
reported a narrower quarter-on-quarter net loss as sales jumped and
said it expects to reach break-even by the end of 2009. ASML's
chief financial officer Peter Wennink, however, cautioned that
"doesn't mean we are seeing a full-swing recovery," as he said he
hadn't seen any capacity growth in the chip market.
ASM International NV (ASMI), which also makes semiconductor
equipment and assembles and packages the chips, reports later
Wednesday.
-By Archibald Preuschat, Dow Jones Newswires; +49 211 13872 18;
archibald.preuschat@dowjones.com
(Ruth Bender in Paris and Kathy Sandler in London contributed to
this report.)