Slow 3Q expected for handset chipmakers

Slowing handset shipment growth at the end of the second quarter from major handset vendors including Nokia, Samsung Electronics, and LG Electronics does not bode well for the global handset market in the third quarter, a sentiment that has been echoed by some major handset chipset players, which have noted that their customers are calling for market growth of lower than 5% in the third quarter, rather than in the 20% range, as seen in previous years.

Chip suppliers have also indicated that handset vendors are not only looking to clear inventory in the third quarter, but are also planning to defer the launch of new products.

In addition, chipset makers MediaTek (MTK), Texas Instruments (TI) and NXP Semiconductors and STMicroelectronics have mentioned that handset demand in China and India has been dropping, which is worrisome, since demand in emerging markets has played an important roles in supporting the global handset market.

The only chipset suppliers that can expect a good performance in the third quarter are Qualcomm, with its 3G patent portfolio and Infineon, with its relationship to Apple.

According to players in the handset chip industry, demand will not recover until around September and then peak in the fourth quarter.