In Hollywood’s movie industry, as in New York’s publishing industry, the cutting question is, “Yes, but what have you done lately?” Add the semiconductor industry to that list.
When Texas Instruments Inc. reported that its third-quarter revenue rose 13 percent to $3.76 billion and net income was up 11 percent to $702 million, its chief executive officer, Rich Templeton, said that was great-but the forecast was cloudy.
“The third quarter was one of the best in TI’s history,” Templeton said. “At the same time, orders declined, leading us to expect that fourth-quarter semiconductor growth will be below the seasonal average.”
The balloons that were filled for the celebration were immediately popped. TI’s stock sagged a bit. The company said that some mobile-phone chip shipments had failed to materialize. Given that TI’s primary customer is Nokia Corp., and Nokia is the largest handset vendor in the world, the situation raised questions about the health of the mobile-phone market.
Then Infineon Technologies reported that the loss of BenQ-Siemens’ business-the latter’s German operations and units in Latin America have closed-would force Infineon to lay off 400 employees worldwide, 200 in Germany.
What gives? Is the sky falling?
“This will not be the year we pass the billion handset shipment mark,” said Will Strauss, analyst at Forward Concepts, which watches the semiconductor industry. “We’ve reduced our forecast on chip vendor’s [digital signal processor] revenue from 15-percent growth to 10-percent growth.”
The bulk of DSP chips-75 percent in Strauss’ estimate-are consumed by the mobile-phone industry. And Texas Instruments, Strauss said, is the bellwether of the chip industry.
Strauss said that of the handset market’s two major elements-higher-end devices in the replacement cycles in developed markets and lower-cost devices in the emerging markets-the latter remains strong, while growth in the former is cooling more rapidly. R
