Chinese economic slowdown could hurt chipmakers

Financial outfit Barrons is a mite worried about the economic situation in China damaging chip companies.

The outfit, while alarmed at destocking trends in the EU, thinks the Chinese slowdown could really cause problems for companies based there.

ON Semiconductor, in particular, is facing a little slice of doom thanks to a weakness in end demand in LCD TVs, automotive, handsets, and PCs.

The outfit had been counting on a myth of strong backlogs and limited capacity expansion would allow Diodes/ON Semiconductor to absorb a short-term pause in demand.

However, after getting on the blower to various outfits Barrons found that semiconductor lead times have started to compress in China to 15-16 weeks from about 20 weeks.

It believes that with demand weakening in China, tech outfits will be in the doledrums.

It seems that the only reason the channel is not cancelling its orders is because they want to build up their stock for the the second half season in the run up to Christmas.

This is what is keeping the industry from sliding down the loo completely.