Chipmakers report mixed results

SV News Service
Silicon Valley

The volatility of today’s semiconductor market was evident in three reports issued by top American IC producers with strong links to the wireless communications market.

National Semiconductor

National Semiconductor has feasted on the global explosion in sales of cellular phones, most of which incorporate some of the company’s communications ICs. On Tuesday, the company said weakness in the cellular device market will cause the company to miss sales and profits targets. The news caused National’s stock to plunge and lose 33 percent in a few hours of trading on Wall Street.

Six of National Semiconductor’s top 12 customers are mobile phone makers and that sales to these companies account for about 25 percent of its revenue.

Last week Ericsson confirmed that there are simply more wireless handsets out there than people who want to buy them. Motorola, on October 11 also cited slower-than-projected growth in the mobile phone market.

National Semiconductor said sales for the current second quarter, which ends November 28, will be six percent to eight percent below first-quarter sales.

While PC-related orders are stronger, they are still below the company’s expectations. Chief Executive Officer Brian Halla said one computer customer blamed the shake-out in the dot-com industry for the lower demand.

Fairchild Semiconductor posted third-quarter profits of $ 84 million, up from $ 25.9 million. Sales rose to $ 476.0 million from $ 335.8 million.

Fairchild predicted sales would rise to about $ 490 million in the fourth quarter and total 2000 sales will jump 39 percent to $ 1.3 billion and that 2001 sales will rise 20 percent to $ 1.7 billion. 

“Demand strength in mobile PCs, servers, Internet infrastructure equipment, and digital consumer products outweighed softer Korean demand and slower demand growth in desktop PCs,” said Kirk Pond, Chairman, President and CEO, Fairchild.

LSI Logic
Milpitas-based LSI Logic said third-quarter net income fell 65 percent to $ 18 million due to high acquisition costs. Revenues rose 35 percent to $ 727.6 million from $ 540 million on strong communication-chip sales. Profits before merger costs were $ 114 million.

LSI’s chips perform the functions of various semiconductors, saving time, money and space. Customers include Cisco Systems, Nokia and Sony, which uses LSI products in PlayStation video-game consoles. “The driver today is the build-out of the communications infrastructure. We see a very strong market worldwide,” said Wilfred Corrigan, Chairman and CEO, LSI.

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