Freescale CEO cautious on chip demand

Thu Dec 13, 2012 4:44pm EST
 

By Noel Randewich

SAN FRANCISCO (Reuters) - Freescale Semiconductor Ltd's chief executive painted a bleak outlook for chip demand, which has been hit by economic uncertainty, and said his plans to refocus R&D resources on key businesses would likely pay off with gains in market share in 2015.

Gregg Lowe, who left Texas Instruments Inc to lead Freescale in June, has embarked on a restructuring that he expects will reverse losses in market share that the chipmaker has suffered in nine of the past 10 years.

Like other chipmakers, Freescale has struggled for over a year as the debt crisis in Greece, concerns about China's growth, and fiscal uncertainty in Washington caused manufacturers of cars, computers and industrial machines to buy fewer semiconductors.

Lowe told Reuters in a telephone interview on Thursday that if fourth-quarter global chip revenue falls year over year, as expected, it would mark a sixth straight quarter of year-on-year declines and match the longest market decline seen in 25 years,.

"History would say that if you've got something that's declined for so long, it would probably go up - but there's no evidence for that," Lowe said. "If the market rebounds that's great, but it's not something anyone can point to or forecast at this point."

His cautious comments were in line with a chip industry report released on Thursday. Market research firm Gartner said it expects semiconductor revenue this year to dip 3 percent instead of growing by 0.6 percent as was previously forecast. It sees the industry growing 4.5 percent next year.

"What we're seeing is end-demand is weak," said Gartner analyst Peter Middleton. "Demand is concentrated in a few areas," he said, pointing to smartphones and tablets.

Chips used in cars and trucks account for 40 percent of Freescale's revenue. Its semiconductors are also used in industrial equipment, cellphones and consumer products.   Continued...