Chip sector seen recovering in second quarter

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The demand for semiconductor products is expected to improve in the second quarter, driven primarily by smartphone and tablet markets and a struggling-to-recover US economy, according to a report by the star.

Both Pentamaster Corp Bhd and Globetronics Technology Bhd expect some recovery in the semiconductor sector in the second quarter.

Heng Huck Lee, chief executive officer, Globetronics said the driver for semiconductor and consumer electronics demand should come from the United States, which was gradually recovering.

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“Electronics manufacturing companies in China and Asia should benefit from the demand in the United States, especially in the smartphone and tablet markets, which will require more light-emitting diodes (LEDs) and chip products,” Heng said.

He said the days-of-inventory (DOI) level for semiconductor chips, which hovered around 81 days for the second half of 2011, should drop to below 80 in the first quarter.

“The DOI should improve due to a tighter control over chip production and the demand created by the Christmas festive season. The normal inventory for chip manufacturers should be 45 days or less. The inventory at Globetronics is managed to around two weeks,” he said.

Heng said the company’s LED business should grow in the second quarter due to a fresh range of product line-up for new customers.

“LED-backlit display panels are facing overcapacity and price erosion presently,” he said.

For the first quarter 2012, orders for Globetronics’ LED products are expected to be flat compared with the fourth quarter 2011, and slightly down compared with the first quarter 2011, according to Heng.

Pentamaster executive chairman CB Chuah said the company expected a moderate improvement of orders for its semiconductor automated equipment in the second quarter.

“The demand from consumer electronic multinational corporations in China, who are supplying to global markets, should provide the stimulus,” he said.

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