INTC, LLTC, AMD: Taiwan Data Encouraging Ahead of Earnings, Says Wells
By Tiernan Ray
Wells Fargo chip analyst David Wong today offers an update on the state of the industry, writing that data from Taiwan Semiconductor Manufacturing (TSM) and other Asia-based supply chain parties are tracking better than expected for the season, which is encouraging for chip companies heading into earnings season.
Writes Wong,
For the March quarter as a whole, our chip related composites revenue tracked in the range of down 5% sequentially to up 13% sequentially. On March 12, TSMC raised its guidance for the March quarter. TSMC’s month of March report shows that TSMC exceeded its higher guidance. Revenues for the foundries TSMC+UMC fell 1% sequentially in US dollar terms for the March quarter as a whole, which we consider to be better-than-seasonal. Taiwanese chip packaging sales grew 14% year over year, compared to combined January+February year- over-year growth of 13%, 13% sales growth in December, 4% growth in November and 8% in October. We view chip packaging as a broad indicator of chip company sentiment and chip company business, as most chip companies outsource their packaging.
As far as “subsystems” sales,
Within our subsystem and system composites, March numbers grew year over year for all segments with the exception of our Acer composite. Our handset, notebook ODM, and computer/motherboard composites, and Hon Hai, were all up 1-20% year over year in the month of March, though Acer fell 18%. However, for the March qtr as a whole, revenue for our subsystem and system composites declined sequentially in the 12-34% range, showing seasonal softness.
Following less-bad PC numbers last week from Gartner and IDC for the PC market, Wong notes that his data for original design manufacturers (ODM) show some improvement in March as well:
March 2014 quarter sales for our Taiwanese notebook ODM composite increased 1% year over year, an improvement over a flat December 2013 quarter, a 4% year-over-year decline in the September 2013 quarter, a 6% year-over-year decline for the June 2013 quarter and an 8% year-over-year decline in the March 2013 quarter.
Wong’s view of the upshot of all of that is positive for chip companies:
We expect most chip companies will meet or modestly beat expectations in upcoming March quarter reports and June quarter guidance. Intel (INTC), Linear Technology (LLTC) and Advanced Micro Devices (AMD) are scheduled to report earnings in the coming week.
