Wells Fargo chip analyst David Wong today writes that December’s sales at contract chip manufacturers Taiwan Semiconductor Manufacturing (TSM), and United Microelectronics (UMC) are likely to see a pronounced drop based on the companies’ forecasts in relation to what’s already transpired.
Basically, sales in October and November were surprisingly strong, Wong writes, with sales at TSM falling a mere 4% in November after a 14% increase in October, from month to month. TSM has said the entire quarter will see a “slight decline,” Wong notes.
To him, that suggests that there will be a “large month-over-month drop of the order of 15% in the month of December.” Likewise, UMC saw sales fall just 2% in November after rising 2% in October, which means that in order to meet a forecast for a slight decline for the quarter, December sales will likely fall 6%.
Wong takes all that, and the deleterious reports from chip makers Texas Instruments (TXN) and Altera (ALTR) last night, as evidence that “both chip companies and their customers are aggressively working to bring down inventory in the electronics supply chain.”
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