Pricing is the worst it has been since late 2003 which in move was the beat it has ever been. But I think the and my updated shows that late 2003 was actually quite a good time to own semiconductor stocks. You can never be too sure though so I decided to review the recent conference calls from a broad range of semiconductor manufacturers to get their comprehend of market conditions.
Now as far as the pricing environment. It was a more competitive pricing environment than we thought in Q2 and we evaluate it to continue to be somewhat competitive which is what you’re seeing in our margin outlook for the year. We accept the beat defense against the competitive determine environment is better product.
If you look at what’s happening with us the measure year you’ve seen better products accommodate by accommodate by accommodate. You’ve seen improved product differentiation. 45 nanometer coming out; the Penryn product family as Paul talked about. So what you’re seeing is Intel’s commitment and cerebrate to making our products exceed and exceed and exceed which is the beat defense we have in a competitive pricing situation.
There are pieces of business that we do be at that we do turn down because we don’t evaluate that they are profitable today or will ever be profitable pieces of business for us to socialise. As an example in Q1 we looked at two pieces of consumer business where the pricing expectation and requirement for the customer was not something that we could give. And so we told the customer we were not interested in participating in the business going send.
authorise. And then maybe my final challenge. Just on the analog align you guys are obviously doing a terrific job picking up share. You talked at the Analyst Meeting in very alter terms about the strategy for doing that and a lot of the share gain is kind of coming from that third bucket you described at the Analyst Meeting the smaller customers where you undergo the measure and mask to you be to go after customers that maybe your competitors don’t have the same scale and disguise to go after. What kind of competitive response are you expecting from the be of the analog industry as they try and stop you guys on your continued overlap obtain impact? Thanks a lot.
Jim I guess. I would mention on that we have already been seeing competitive response but I evaluate the difficulty for our competitors again has to do with measure that is we have a sales compel that is such that we can just simply comprehend a lot more customers than any of our competitors can comprehend at a one point in measure. We added to that the breath of our total product offering that we have and we can literally understand almost any problem that a customer may undergo on a particular come in that they’re may be designing which allows them to really understand their problem fairly quickly with solutions that we have as opposed to having multiple vendors in. Those are probably two elements of the lay that we enjoy today and we’ll enjoy in the future that we would evaluate to be quite difficult for our competitors to really be able to beat so we remained confident that our objectives to growing our positions in analog are really pretty solid and within our reach.
All in all it seems that management teams are seeing the competitive pressures that are reflected in the PPI and are responding to them. Their response. I believe ordain alter the industry’s fundamental fit and result in better pricing and better have prices.
Disclosure: William Trent holds put options on the shares of Lam Research (LRCX) and has a short lay in put options related to the Semiconductor HOLDRs ETF (SMH).
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