Looking at some key indicators from Taiwan's chip and PC houses, the signs in the IC industry are going from bad to worse.
Advanced Semiconductor Engineering Inc., Global Unichip Corp., United Microelectronics Corp. and other chip industries posted lackluster sales figures for August. Taiwan PC assemblers Like Compal Electronics and Wistron Corp. gave mixed results in the channels.

But that's not what the expected outcome amid a slump, generally in the overall slowdown in the IC sector. Recently, Gartner Inc. made some adjustments in its IC forecast in 2008 and 2009.

In one indicator, UMC reported net sales of NT$8.165 billion ($256 million) for August, down 21.74 percent from a year ago and down 4.35 percent from July.

ASE reported net revenues of NT$8.781 billion ($275.4 million) for August, up only 0.8 percent from July, but down 6.5 percent from a year ago.

Not totally down
Not all was doom-and-gloom in Taiwan. Global Unichip Corp. said its August revenues were up 7 percent from July 2008 and up 37 percent over last year.

On the PC front, the signs are mixed among Taiwan's ODM giants like Quanta Computer Inc. It produces notebook PCs on an OEM basis for many PC makers.

"Sluggish corporate notebook PC markets in both North American and Europe negatively affected Compal's shipments, offset by growing consumer notebook in Eastern European and emerging markets," said Daniel Amir, analyst, Lazard Capital Markets.

"Despite weaker-than-expected European markets, Quanta maintains its full year 40 million notebook shipments guidance (26 percent increase over 2007), as the demand from emerging markets remains solid," he added.

"August shipments were flat or slightly up versus July. We forecast 10 percent growth month/month in September, after a 3-percent increase in August and 20 percent quarter/quarter growth both in Q3 and Q4," he noted.

"Taiwan PC assembler, Wistron, raised its Q3 shipments estimate to 5.8 million from 5.4 million, 25 percent quarter/quarter," Amir said. "Wistron is tracking ahead of the industry average, as it is gaining market share from other notebook ODMs," he added. Others had a slightly different viewpoint. "Recently I had been quick to raise the positive data points on the PC vertical as they had come up, hoping that they are a signal of the seasonal recovery we all expect to see in the 2H of the year; however over the last week we have picked up several negative data point that are less encouraging," said Avi Cohen, head of research, Avian Securities.

Reduced forecast

"Obviously, the Compal case was discouraging lowering notebook growth targets for Q3 to 15 percent quarter-over-quarter from 20 percent," he added.

There were other troubling signs. "Seagate Technology revised its list pricing significantly in distribution. Price cuts put list going forward at levels equivalent to where the deepest rebate levels had been set previously. This shift appears to be part of a new Seagate channel policy which will effectively limit rebates moving forward, with pricing being far more closely tied to list," he noted. "As such, we believe the downtick to list significantly overstates real changes in pricing, however, the trend is still in the wrong direction."

Poor growth as expected
In Taiwan, meanwhile, the traditional IC and PC sectors are clinging on. Solar-cell producers are hot in Taiwan. The country's LED makers said their sales rose 16.1 percent in 1H 08 from the same period in the past year.

The companies' 1H 08 sales rose to NT$24.2 billion ($771.3 million) from NT$20.8 billion in the same period a year earlier, according to information the companies submitted to the Taiwan Stock Exchange.

"New applications are increasing," said Ivan Lin, analyst with market researcher, LEDinside in Taipei. "LEDs are increasingly used as backlights for notebook computers, in street lights and for factory lighting," he added.

Taiwan's rating

Taiwan has the world's second largest LED industry, with a 20 percent share of the global market, according to LEDinside. Japan has the world's largest LED industry with a 37 percent share of the world market.

LEDinside forecasts that Taiwan will have a 30-percent share of the market by 2010, as many of Taiwan's flat-panel display makers prepare to enter the business.

Its LED makers include Arima Optoelectronics Corp., Bright LED Electronics Corp., Epistar Corp., Everlight Electronic Co., Formosa Epitaxy, Genesis Photonics Inc., Harvatek, I-Chiun Precision, Ligitek, Opto Tech and Unity Opto Technology Co.

Source:EE Times