Another Sign of Too Much Chip Inventory
When there is too much inventory out there, you need to lower prices on the stuff you have to make it move. It stands to reason, then, that a new low-price unit isn’t exactly what is needed. So delaying its launch makes sense.
Texas Instruments (TI) and Silicon Lab will postpone their scheduled volume production of “ultra-low-price” handset chips until the first quarter of next year, according to today’s Chinese-language Commercial Times quoting sources in the semiconductor industry. In May, the paper noted that TI would mass produce “ultra-low-price” handset chips from October 2006 while Silicon Lab’s volume production will commence in July 2006.
Update: The counter-argument to this is Qualcomm’s guidance upgrade. Of course, higher than expected shipments could just be adding to inventory. We’ll know one way or the other in a quarter or two.
Wireless technology company Qualcomm Inc. on Tuesday raised its quarterly earnings forecast as shipments for its mobile station modem (MSM) chips grew more than 50 percent during the period.
Qualcomm said it expected fiscal third quarter revenue, before special items and share-based compensation, of $1.91 billion to $1.96 billion, compared with a previous forecast of $1.77 billion to $1.87 billion.
Update 2: The Stalwart finds evidence that the strong sales are just making inventory worse:
This data point should have widespread implications: Nokia and Motorola seem to be cutting orders for mobiles.
Nokia Oyj and Motorola Inc, the world’s two largest mobile-phone makers, have cut orders, indicating handset supply is exceeding demand, JPMorgan Chase & Co’s top technology analyst Bhavin Shah said.
Nokia reduced purchases of handset displays, while Motorola cut orders of Compal Communications Inc phones last month, Shah said in Taipei last Friday. He didn’t provide specifics. …
Disclosure: William Trent has a long position in SMH.
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