EEPW论坛

By Suzanne Deffree -- 3/20/2003 4:33:00 PM Historically, war has served to invigorate the economy, but that might not be true this time around. What President Bush has said will be a broad and concerted campaign has already taken affect at at least one semiconductor company, Microchip Technology Inc., which on a conference call this week announced that the Iraq conflict had forced it to lower its quarterly estimates. "Net sales are expected to be down 3 to 4 percent sequentially from the December 2002 quarter," said Steve Sanghi, the company's president and CEO. "We have seen significant impact on our business from the imminent outbreak of war in Iraq, as well as escalating tensions in Korea." The embedded products player saw revenues increase steadily over the past four quarters, climbing to $171 million in its fiscal Q3, ended December 2002. Now Microchip says that uncertainty among U.S. OEMs and customers has caused its worldwide revenue to slip, even in the Asia/Pacific market. "Our U.S. OEM business is heavily impacted and is expected to be down 17 percent sequentially," Sanghi said. "U.S. OEMs seem to be frozen in their tracks and are deferring purchasing decisions until a clearer picture emerges on the geo-political front. U.S. distribution business is fine and it is expected to be up 6 percent showing that we continue to win new designs and new customers even in a very difficult market." Asia -- which is usually down in the March quarter, following the New Year holiday and post U.S. holiday depression -- is down more than usual, the CEO continued. "Ordinarily we would not expect Asia to be down 8 percent. Escalating tensions on the Korean peninsula have heavily impacted our Asian business, as sales in Korea are expected to be down about 20 percent, and 8 percent of our worldwide sales are in Korea." Bill McClean, president of analyst firm IC Insights Inc., recently updated his signature study, The McClean Report (MR), to forecast the uncertainty over the state of the IC industry. "The U.S. is still the engine of growth for the worldwide economy," McClean noted in the report. "IC Insights has reduced the U.S. 2002 GDP figure printed in MR03 from 2.6 percent to 2.4 percent. This in turn served to reduce the 2002 worldwide GDP growth figure from 2.6 to 2.5 percent. Considering that many economists believe that worldwide GDP growth of 2.5 percent or less constitutes a global recession, 2001 and 2002 can be considered rare 'back-to-back' recession years." Between recession and war, Microchip Technology doesn't have a bright outlook for one of its key industries, cell phones. The popular product worldwide, and perhaps most popular in Korea, has hit with bloated inventory levels and a possible U.S. conflict with North Korea, Sanghi said. "The non-cell phone related analog business is expected to be actually up about 7 percent. … But our cell phone related analog business is expected to be down about 50 percent," he noted. "A lot of our cell phone business is in Korea and has been impacted severely. There also seems to be more inventory correction in the cell phone industry, squeezing down unit volume." Overall, analog products, which make up about 8 percent of Microchip's business, are expected to be down about 9 percent to 10 percent. Cell phones make up about 25 percent of analog's revenue, or 2 percent of the company's total revenue, Sanghi said. "This quarter the cell phone business in analog is down to about 14 percent, down from slightly over 25 percent," he said. "This last quarter drop was a bit more severe driven by the tensions in Korea. Even though the outside of the cell phone business grew, it was not enough to overcome that." Still, on a brighter note, Sanghi said he did not see this as a long-term problem. "We do not sense any longer term issues with our analog strategy and we are maintaining the course as the number of customers in the cell phone business, a more desirable business, is continuing to expand." McClean also expects the war to give way in Q3, possible to 10 percent to 20 percent growth in the IC industry. "Although not specifically stated in MR03, IC Insights’ assumption regarding Iraq was, and still is, that a 'resolution' of the situation would be evident by the end of July," McClean stated. "If this is the case, healthy economic growth and a significant recovery in the IC industry could still take place beginning in late Q3 2003 and extend throughout Q4 2003. "The 2003 Iraq scenario can range from being a complicated and drawn-out war coupled with complete anarchy in the Middle East, high oil prices and numerous new major terrorist acts to a quick and decisive end to the hostilities, a stable Middle East, extremely low oil prices and a friendly political situation," McClean said. "While the actual circumstances are likely to reside somewhere between these extremes, IC Insights currently believes that the post-Iraq geopolitical environment can still accommodate double-digit growth in the IC industry in 2003."