Semi industry sees light at the end of the tunnel

Dallas (TX) – Semiconductor maker Texas Instruments has updated its business outlook for the second quarter and raised estimates of earnings.

In a scheduled update to its business outlook for the second quarter of 2009, TI has raised and narrowed its expected ranges for revenue and earnings per share. When the company’s second quarter ends at the end of this month, it now expects to post revenues of $2.30 – $2.50 billion, compared with estimates published at the end of Q1 of $1.95 – $2.40 billion.

EPS is now reckoned to be somewhere between $0.14 – $0.22 a share, up from its April predictions of $0.01 – $0.15. The company plans a conference call later today to flesh out the details.

The news comes as further encouragement for the industry following the Semiconductor Industry Association (SIA) announcement that worldwide sales of semiconductors rose to $15.6 billion in April, an increase of 6.4 percent from March when sales were $14.7 billion.

April sales were still 25 percent lower than April 2008 when sales were $20.9 billion.

“The better-than-expected 6.4 percent sequential increase in April sales was driven by moderate improvements in a number of end-demand drivers and inventory replenishment,” said SIA President George Scalise. “The PC market has been stronger than predicted earlier in the year.

“Consensus forecasts currently project that PC unit sales in 2009 will decline by about six percent compared to earlier forecasts of a decline in the range of 12 percent.  Analysts are also more optimistic about cell phone unit sales, which are now projected to decline by around seven percent compared to earlier forecasts of 15 percent. PCs and cell phones account for nearly 60 percent of all semiconductor consumption,” he added.
SIA also said that the automotive market, which accounts for about seven percent of total semiconductor sales, remains weak, while the consumer electronics sector presents a mixed picture with analysts projecting increased unit sales of digital televisions and hand-held game players, but lower unit sales of most other consumer electronics products.
“Two consecutive months of sequential sales growth may be an indication of a return to more normal seasonal sales patterns in some market sectors, albeit at lower sales levels than last year,” said Scalise.

In its mid-year forecast, the SIA projects worldwide semiconductor sales of $195.6 billion for 2009, a decline of 21.3 percent from sales of $248.6 billion in 2008. SIA projects that sales will begin to rebound in 2010, with year-on-year growth of 6.5 percent to $208.3 billion, followed by 6.5 percent growth in 2011 to $221.9 billion.