April 5, 2008 – Amid suggestions from top foundry TSMC that macroeconomic factors are weighing on customer demand, one analyst firm is lowering its expectations for a weaker-than-seasonal second half of the year, though that also means a recovery will be “expedited.”
FBR Research analysts Mehdi Hosseini and Rafi Hassan point out in a research note that TSMC now guides mid single-digit growth in wafer shipments in 3Q, down from ~10% expectations (which is also the five-year average) and “much lower than our already conservative expectations.” Cutbacks are now “across the board” despite some strength in graphics and chipsets, the analysts claim, foreseeing monthly sales to bottom out in September.
The good news, they say, is that the problem is weak end market demand, not any inventory build problems. So, “when end-market demand turns, we would expect a rather expedited recovery since inventories should remain at healthy levels.”
The firm also noted that TSMC has “finally [thrown] in the towel and admitted that it can no longer increase blended prices,” which it had wanted to do for some time, inspiring talk among other foundries to do the same. TSMC’s ASPs actually dropped 2%-3% in the June quarter, even as its factory utilization continues to scrape the ceiling — its most advanced nodes are at full capacity with average rates nearly 100%.