The latest news, market research firm IDC Vice President Mario Morales has no good news recently. According to the Market Watch website, according to his initial estimate, the output value of semiconductors will not recover immediately in the short term, and has not yet bottomed out. The turning point appeared in the second half of 2009. Also, the current cost reductions are at the right time, and the tightening of funds will take a long time to achieve mergers and acquisitions.
Mario Morales said at a roundtable in San Jose, Calif., last week that the most frequently asked question is when the semiconductor industry will bottom out. He said that there is no possibility of a recovery in this industry, at least until mid-2010. He made an analogy to the IC industry managers at the conference. The current semiconductor industry is like a roller coaster. It is in a state of slow-moving and bumping. After that, it will swoop down and make a diving fall. Soon after, I will be on the _, but the _ high level is not big. Morales said that the semiconductor industry has not yet reached the bottom.
The disappointment of managers can be imagined, but they should not be surprised. Although some managers come from companies with good operations, each participant knows about the current downturn. As the terminal demanders of the IC industry are mostly computer companies, mobile phone manufacturers, consumer electronics manufacturers, and automakers, the early warning of IC production value shows that the future prospects of these back-end customers are not good. Morales said the wave of recession will be very broad and will see more companies showing double-digit declines, such as PCs and mobile operators.
At present, the semiconductor industry has seen the NOR flash memory manufacturer Spansion and the memory company Qimonda AG file for bankruptcy protection. IDC predicts that global semiconductors will see a 22% decline in output in 2009, and asset spending will shrink as companies avoid updating or augmenting plant equipment. Gartner expects sales of chip production equipment to decline, and its sales to the semiconductor industry's companies are expected to reduce revenue by 45%.
Chip maker Intel is currently the only manufacturer to mention equipment overhead, and Morales said it will also shut down several old plants to cut costs. Some people think that such a volatility in semiconductor production may trigger more M&A activity, but due to the tight capital flow in the credit market, it is more difficult to make a merger with more than $100 million in acquisitions. For example, Intel, Broadcom, and Qualcomm may be the most qualified companies to acquire, due to the accumulated capital. From the latest quarterly earnings report, Intel holds $8.7 billion in cash, Broadcom has $1.2 billion, and Qualcomm has $3.8 billion. However, Morales noted that the current top priority in these semiconductor companies is to restructure or apply for a longer period of corporate debt. For example, chip maker AMD has recently split its factories into independent companies in an effort to secure Abu Dhabi buyers' capital injections.
The Philadelphia Semiconductor Index can prove that IC industry stocks are at their lowest point in a decade. At this point, investors may want to start with a strong stake and buy related stocks that have fallen. For example, on Monday, Texas Instruments reported that the first quarter earnings report showed good news of a slight increase in revenue, but investors should be on the ice.
Investigator Sanford Bernstein analyst Richard Keiser pointed out in the latest report that even if some of the star stocks unite to get the attention of the public, the negative negative environmental factors that have weak terminal demand still exist. Some data show that investors speculate that demand will enter an inflection point in the second half of 2009. Keiser pointed out. This increases the risk, assuming a deepening recession, and the negative reverse impact of semiconductor stocks will continue. Keiser said in the report, in short, we believe that the hardware needs of enterprises will be weak for some time, and the potential demand of the secondary market may be a countervailing force. This means that the semiconductor industry may not be able to see an immediate recovery, or to restore the scale before the recession (at least not in the short term).
Companies seeking to buy and buy buyers may now be looking for good deals. However, the wait-and-see time of investors may be extended.
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