The Semiconductor Industry Association’s (SIA) announcement yesterday that worldwide chip sales dropped 2.4 per cent from October to November 2011 has sent analysts chugging Prozac.
Despite the fact that the SIA pointed out that there was a 3.1 percent year-over-year decline and total chip sales for the year-to-date-period were up just 0.8 percent, analysts seemed to think we should be admiring the silver lining.
Barrons said that the drop was worse than analysts thought, but they seem determined to look past the bad news.
JP Morgan’s Christopher Danely was quoted as saying that the November number from SIA, $22.5 billion, represented a 3.7 percent drop month-to-month, which was well below the 4.9 percent increase he had been anticipating. In fact, it was a good figure for November which normally sees sales of 2.7 percent.
But it was no surprise, and chip makers are “under-shipping demand” by “more than 15 percent,” with overall chip shipments in units having perhaps fallen nine percent in the second half of the year. That would be well below the five percent unit growth for PCs and seven percent unit growth of handsets.
Danely thinks that chip sales will bottom out this month.
Doug Freedman, of RBC Capital said that it was the second month in a row that the chipmakers had come in below his estimates. Analog chips, logic ICs, sensors, “MOS” memory chips, and discrete semiconductors did badly.
Freedman thinks DRAM average selling prices have actually started rising from November’s level, but that it will be offset by “mild pressure” on prices for NAND flash memory chips.
Freedman thinks that next year will be better than usual:
Wedbush Securities’ Betsy Van Hees wrote in a note to clients yesterday that the worse-than-seasonal results for the month weren’t surprising. However, she thinks that there will be some bad news in December.
All of these analysts are taking the Mystic Meg approach to a gloomy Christmas. Things will be glum in December but should improve by next year. If everything turns sour next year, we’ll have forgotten these predictions by then.