Electronics Sales Activity Was Hot, Ic Sales For The Week Lagged

It was a good news bad news week for the High Tech supply chain

. Electronics Sales Activity was hot, while IC billings lagged.

Last week, IC billings dipped as could be expected due to the Thanksgiving holiday in America, according to VLSIresearch Weekly IC Tracker. Billings broke a five week positive run with a slight dip. However, while the week-overyear growth figures were continued on a very positive note, ASPs registered a fourth week of increase, mirroring a decline in units. Be wary of interpreting too much into these two, as its a normal Thanksgiving mix shift. As the end of the Christmas production season nears demand is soft for low-value and easy-to-obtain parts, while high-value parts rise because manufacturers stock lower inventories of the latter.

Chip Price/Performance told another story. VLSIs CPPI fell by another point in Thanksgiving week, extending its slide for the seventh consecutive week. The CPPI-to-Moores Law gap from 4.9 points to 4.5a fresh new low for the year. Last weeks incident in South Korea gave NAND spot prices a boost as fears of delivery disruptions rose due to rising tensions. These fears, however, had no affect on DRAM spot prices, which continued to tumble at an alarming rate. The drop in CPPI Chip Price/Performance now totals -7.7 points for the first five weeks. Its looking a lot like 2004, which was followed by a mild year for ICs, but a down year for semiconductor equipment sales.

The good news was that Electronics sales activity turned HOT over the Thanksgiving holiday and it actually soared in the United States on the day itself. After the turkey, people either watched the games or they shopped on the Internet. It then continued into Friday. Consumer and PCs were hottest, followed by IT Infrastructure, and Mobile. Regionally, North America was hot as was Asia and even. But China was cool.

On the electronics pricing front, the overall picture was positive. It was interesting to see some raise prices the week before Thanksgiving just so they could say they were In Laptops, pricing for the lowest 40% of the offerings actually went up. So there was some strength here. There was also a big difference between name brand laptops and the overall average.

The abatement in the overall average was largely due to a rise in branded prices, led by Asus and HP. Switching to consumer, the weakness came largely from LED TVs. Digital cameras held flat and Appliances were actually up.

The real point here is that the weakness in the IC market is not the result of weak electronics demand, which we saw in 2008, it has far more to do with excess supply due to production ramps.

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by:Dan Hutcheson

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