Top chipmakers form consensus on slow PC demand

Demands for dynamic random access memory (DRAM) chips were tepid during the second quarter, especially in Europe, due to a devaluation of the euro, elections in Great Britain and the European debt crisis, said Pai Pei-lin, vice president of Nanya Technology.

However he gave a more upbeat outlook for the second half, saying demands for DRAM products will pick up eventually due to a PC replacement cycle among businesses as well as increased sales in the consumers' market.

Lin Po-wen, chairman of Siliconware Precision Industries, posited demands for PCs will decline in the third quarter, as Europe is not out of the woods yet, and a recovery in the United States has shown signs of a slowdown.

Weak demands for PC products were observed by both Advanced Semiconductor Engineering and Realtek, which designs chips for networking devices.

“Inventories of PC manufacturers have been at a higher-than-usual level,” said Realtek. “Sales for the third quarter will probably remain the same as the second.”

ALi Corp., which designs chips for set-top boxes (STBs), said sales for the third quarter will drop by 10 percent from the second, due to slowed demands in Europe. STBs convert digital signals into analog formats readable to regular television sets.

Another firm, Sunplus Technology, said demands for STBs and digital TVs in Europe were sluggish in July and August. “September performances by European firms will play a decisive factor in determining whether our third quarter sales will exceed those for the second,” Sunplus said.

Hsieh Ching-chiang, president of MediaTek, recently noted that the firm may ship out less chips for optoelectronic devices in the third quarter than in the second, due to slowed demands for PCs.

Taiwan Semiconductor Manufacturing Co., the world's largest contract chipmaker, holds a similar outlook, saying PC product shipments may drop in the three-month period ending September, despite the fact the company's manufacturing facilities are running at near full capacity.

According to analysts, IC manufacturers were busy stocking up on goods in the beginning of the year, believing that demands would be strong throughout 2010 due to various positive economic data.

However, several negative events in the first half have forced downstream manufacturers to adjust their inventories, slowing down the business of their upstream suppliers.

Most companies however remain optimistic for next year, saying business should be better in 2011 than 2010.

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