Taiwan handset IC design houses worry about vendors trimming shipments

Taiwan handset IC design houses express concern about leading vendors possibly trimming shipments, citing a slow demand warm up seen so far, according to sources at the companies.

Rumors have surfaced about a possible revision in annual shipments guidance from leading handset vendors, including LG Electronics, Nokia and Samsung Electronics, during the mid-second quarter due to sluggish demand caused by the subprime mortgage meltdown, the sources said. It is likely that most leading handset vendors will be unable to meet their shipment targets in the second quarter, the sources commented.

Citing past experience, handset IC design houses usually see full order bookings in the second quarter. But demand from handset vendors was relatively strong only during March and April. Order bookings have been staying flat with a slowdown in shipments from late April.

Many leading handset IC design houses have already foretold a weak outlook. MediaTek has already indicated that handset demand from China is going to be lulled by macroeconomic controls, with shipments expected to trend down gradually after the Labor Day holiday in early May. Spreadtrum Communications from China, in the meantime, also guided that its second-quarter sales will grow only by single digits on quarter in the second quarter.

source