The Japan disaster in March prompted IDM and fabless companies to overbook chips, but the inventory build-up has not been consumed due to a slow second quarter, according to Bough Lin, chairman for packaging and testing firm Siliconware Precision Industries (SPIL). Excessive inventory is bound to affect sales in the third quarter, said Lin.
Chip growth in the third quarter of 2011 is unlikely to enjoy peak season effects as seen in past years, as macroeconomic troubles weigh on end market demand, combined with adjustments in supply as a result of overbooking by buyers, Lin noted. The uncertain demand and possible chip ASP pressure has cast a shadow on the industry outlook for the second half of the year, Lin indicated.
However, Lin pointed out that rising popularity of smartphones and tablets, and continuously growing emerging markets, will be key to stimulating demand for semiconductors in the second half of 2011. Overall the outlook is cautiously optimistic, Lin concluded.
SPIL's sales for the second quarter should come in at the lower end of its guidance, Lin said. Achieving double-digit sequential growth in sales for the third quarter will be challenging, according to Lin.
SPIL posted consolidated revenues of NT$14.47 billion (US$501 million) in the first quarter of 2011, down 6.5% on quarter. The company has estimated that without considering exchange rate volatility, consolidated revenues would increase 3-7% sequentially in the second quarter.