Monday October 29, 2012
Some companies say Q4 worst period for chips in four years
By DAVID TAN
GEORGE TOWN: Local semiconductor and electronics firms are anticipating a flat fourth quarter versus last year, with some companies calling it the worst quarter since 2009.
The economic crisis had prompted many companies to tighten their budgets for the final quarter, as they did not want to end up with excess inventory for the year.
“Furthermore, the orders for consumer electronics products to be manufactured for the Christmas period have also stopped, as the festive holidays are just around the corner. The worldwide book-to-bill ratio for the industry has also dipped below one, indicating an unhealthy trend,” he said.
A book-to-bill ratio of above one indicates more orders are received than filled, showing a strong market where demand outpaces supply. A book-to-bill ratio of below one indicates weaker demand.
According to the September Book-to-Bill Report released by SEMI, North America-based manufacturers of semiconductor equipment posted US$952.9mil (RM2.9bil) in orders worldwide in September 2012 (three-month average basis) and a book-to-bill ratio of 0.81.
Mini-Circuits, which makes radio frequency chips for the telecommunications industry, is expecting a flat fourth quarter compared with a year earlier.
“We did well in the second quarter because of the new powerful RF chips. But the momentum slid in the third quarter, worsening in the fourth period,” Kiew said. “For us, the whole of 2012 will be flat against last year.”
He cited the slowing consumption in China as a major reason.
“The crisis has affected, in particular, the test handling equipment for logic chips, which generate about 30% of the group's revenue.
“Our sales of test handling equipment for logic chips are expected to dip by double digits in the fourth quarter.
“However, the pick-up in sales of test handling equipment for micro electro-mechanical systems motion sensors and microphones for the smart-phone and tablet markets is expected to cushion the group against the impact of the business supporting semiconductor chips,” he said.
Chuah added that this should be a flat year against 2011.
Pentamaster is now in talks with smart-phone and tablet manufacturers to produce the next generation of test equipment for them, according to Chuah.
“The Asean markets contribute less than 5% of the group turnover, so we are now trying to grow their contribution.
“The business potential is very good as there are also Japanese and (South) Korean multinational corporations (MNCs) in Indonesia and Thailand that require our double-sided printed circuit boards (PCB) for their household appliances and consumer electronic products,” said H'ng.
“However, our tray handling equipment, the advanced optical inspection and advanced X-ray inspection machine, which support the PCB industry in the US and Asia markets, have cushioned us against the impact from the semiconductor sector,” he said.
The MVS equipment, which is used for chips inspection, generates 40% of the group's revenue.
“We expect a flat fourth quarter against last year's corresponding period and a flat year against 2011,” Chu added.
According to SEMI, the three-month average of worldwide billings in September 2012 was US$1.18bil (RM3.59bil), about 12% lower than the revised August 2012 level of US$1.34bil (RM4.07), and is 10.4% less than the August 2011 billings level of US$1.31bil (RM3.98).
The decline in bookings and billings for semiconductor equipment to levels last reported in the fall of 2011 further confirmed the second-half investment slowdown, said SEMI president and chief executive officer Denny McGuirk.
In the current cycle, device makers were grappling with lower average selling prices and uncertainty in the broader economy, which clearly had a near-term impact on equipment purchases, he added.
SEMI is the global industry association serving the nano and micro-electronic manufacturing supply chains.