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LRCX - Lam Research News Story

$608.98 -6.9  -1.1%

Last Trade - 17/09/21

Sector
Technology
Size
Large Cap
Market Cap £63.40bn
Enterprise Value £62.88bn
Revenue £10.61bn
Position in Universe 147th / 7151

WRAPUP 2-Chip results augur more tech gloom as slowing China weighs

Thu 24th January, 2019 12:36pm
* Texas Instruments misses on revenue, beats profit estimate
    * SK Hynix logs first profit decline in 2 years
    * STMicro sees further decline in Q1 but rebound in Q2
    * China expected to slow further in 2019
    * Demand expected to pick up in second half 

 (Adds STMicro results)
    By Cate Cadell and Ju-min Park
    BEIJING/SEOUL/PARIS, Jan 24 (Reuters) - Sombre results from
chipmakers SK Hynix Inc  000660.KS  and Texas Instruments Inc
 TXN.O , on the heels of warnings from tech behemoths Samsung
and Apple, indicate more gloom for the sector as China's economy
slows to its weakest in decades.
    A raft of earnings, analyst notes and market commentary in
recent weeks have confirmed that a slowdown in the world's No.2
economy, exacerbated by its crippling trade war with the United
States, will continue to squeeze sales and profits at technology
companies, at least in the first half of the year.
    Chinese woes led to South Korea's SK Hynix turning in its
first quarterly profit decline in two years. The world's No.2
memory chipmaker, which depends on China for more than a third
of its revenue, also said it plans to spend 40 percent less on
buying chip equipment this year.  urn:newsml:reuters.com:*:nL3N1ZL2KL
    Texas Instruments (TI), supplier of touchscreen controllers,
power-management chips and a control device for Apple's  AAPL.O 
iPhones and iPads, reported a better-than-expected quarterly
profit, but its revenue missed estimates.  urn:newsml:reuters.com:*:nL3N1ZN5ML
    The Dallas-based company said demand in China was weaker
than other regions, especially for smartphones, including demand
from Chinese smartphone makers.
    "We are seeing signs from our customers and the channel that
this weakness is primarily from increased caution due to trade
tensions," Dave Pahl, head of TI's investor relations, said. 
    "We assume that this weakness is a combination of lower
local end-demand as well as reduced exports, but we do not have
the visibility to distinguish between the two."
    STMicroelectronics  STM.PA , Europe's second-biggest
chipmaker after Germany's Infineon Technologies  IFXGn.DE , said
it expected first-quarter sales to drop by more than a fifth
from the last quarter of 2018. 
    The Geneva-based company, which supplies sensors to Apple
and the automotive industry, is suffering from weaker demand for
its mass-market microcontrollers as Asian clients use current
inventories rather than placing new orders. 
    Market data indicates shipments in China, the world's
largest smartphone market, fell about 12 percent last year as
consumers held on to their older devices. 
    Economic growth in the country, which has generated nearly a
third of global growth in recent years, slowed to its weakest in
nearly three decades in 2018 and is expected to ease further
this year.  urn:newsml:reuters.com:*:nL3N1ZL2CH urn:newsml:reuters.com:*:nL3N1ZA2NV
    Smartphone shipments will further dip 3 percent in 2019 to
below 400 million for the first time in five years, market
research firm Canalys estimates.  urn:newsml:reuters.com:*:nL3N1ZK02E urn:newsml:reuters.com:*:nL3N1Z82MC
    
    BAD NEWS
    Apple was the first to flag anaemic Chinese demand for
iPhones with a rare cut to its sales outlook earlier this month.
 urn:newsml:reuters.com:*:nL3N1Z236Y
    The company, which lost its crown as the world's top-listed
firm after the news, is likely to have cut planned production
for the March quarter as well, Nikkei reports.  urn:newsml:reuters.com:*:nL3N1Z93G0
    Samsung Electronics  005930.KS , chip supplier to Apple and
Chinese tech giant Huawei  HWT.UL , followed with more bad news
- an estimated 29 percent drop in fourth-quarter profit and
subdued earnings for the current quarter.
    "Demand in the tech industry is going to be weaker than
thought in the first half," Seoul-based Yuanta Securities
analyst Lee Jae-yun said.
    "Until the first half of 2018, companies were very
aggressive about their investment, then that quickly turned
conservative from the second half of last year and will continue
throughout the first half of 2019." 
    The Philadelphia Semiconductor Index  .SOX  has lost nearly
a fifth of its gains since hitting a record high in March 2018,
as chip prices fell due to bleak smartphone sales and a push
back in spending by data centre customers to cut inventories.
            
    SILVER LINING
    Taiwan Semiconductor Manufacturing Co Ltd (TSMC)  2330.TW ,
which last week forecast its sharpest quarterly revenue fall in
a decade, said a sudden drop in sales of high-end smartphones
has led to an inventory build-up.  urn:newsml:reuters.com:*:nL3N1Z92D7
    Still, the pushout in chip orders is generating optimism
that sales will pick up towards the later half of the year.
    Dutch chip-tooling company ASML Holding NV  ASML.AS , which
serves Samsung, TSMC and Intel  INTC.O , told Reuters that
Chinese demand for chip manufacturing equipment has not waned. 
    ASML forecast lower sales for the first quarter, but said it
would pick up later.
    Things are also expected to get better for Samsung and
Hynix, which have been plagued by weak demand from data centres.
    STMicro shares jumped nearly 9 percent, making them the top
performer on France's CAC 40 index after its boss delivered an
upbeat forecast for the second half of the year.  urn:newsml:reuters.com:*:nL8N1ZO0T1 
    Huawei, the world's No. 2 smartphone maker after Samsung,
struck an optimistic note on Thursday, saying 2018 sales at its
consumer business exceeded a record $52 billion on strong demand
for its premium smartphones. 
    The company, which is facing mounting global scrutiny of its
activities, also announced its first 5G base station chipset and
said it aimed to unveil its first foldable 5G smartphone next
month.  urn:newsml:reuters.com:*:nL3N1ZO1TR
    ASML's American rival Lam Research  LRCX.O , posted
better-than-expected quarterly results. 
    Programmable chipmaker Xilinx's  XLNX.O  results and outlook
beat analysts' expectations, helped by rollouts and preparation
for so-called 5G cell phone networks in South Korea and, to a
lesser extent, China and North America.

 (Reporting by Cate Cadell in Beijing and Ju-Min Park in Seoul;
Additional reporting by Heekyong Yang, Sijia Jiang and Mathieu
Rosemain; Writing by Sayantani Ghosh; Editing by Himani Sarkar
and Jason Neely)
 ((sayantani.ghosh@thomsonreuters.com; +65 6870 3803; Reuters
Messaging: sayantani.ghosh.thomsonreuters.com@reuters.net))
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