Sat, Sep 25, 2004 - Page 11 News List

Philips cuts chip sales forecast on waning demand

BLOOMBERG

Royal Philips Electronics NV, Europe's third-largest maker of semiconductors, reduced its third-quarter chip sales forecast as demand wanes, joining companies including Texas Instruments Inc and Intel Corp.

Philips, also Europe's largest maker of televisions, expects third-quarter chip sales in dollar terms to be unchanged from the second quarter, compared with a July forecast of growth of as much as 4 percent, the company said in an e-mail.

The Dutch company, whose chips are used in Nokia Oyj mobile phones and DaimlerChrysler AG cars, is the first of Europe's main chipmakers to join US and Asian competitors in forecasting lower sales. Global chip sales growth may slow to 20 percent in the second half from 31.4 percent in the first six months of the year, researcher ISuppli Corp said on Sept. 10.

Philips expects the chip industry as a whole to show 26 percent growth this year and "single-digit" growth next year, in US dollar terms, according to slides posted on the company's Web site.

The company's third-quarter chip sales forecast excludes revenue from the mobile display systems business, which makes screens used in Nokia Oyj phones. The company will report third-quarter earnings Oct. 12.

The Philips "reduction of guidance is quite in line with what other semiconductor makers have said in recent weeks," analyst Bert Siebrand at Bank Oyens & Van Eeghen wrote in a note to investors. He rates Philips shares "buy."

Next year, global sales are expected to increase by 9.6 percent instead of a previously forecast 11.8 percent, ISuppli said earlier this month. Chip sales this year may climb about 28 percent to a record US$214 billion, industry group Semiconductor Industry Association said Sept. 2.

Dallas-based Texas Instruments said Sept. 8 third-quarter sales will be US$3.1 billion to US$3.24 billion, from a July prediction of as much as US$3.44 billion. LSI Logic Corp, which makes chips used in DVD players and storage equipment, on Sept. 13 also cut its third-quarter sales forecast.

Intel, the world's biggest computer-chip maker, on Sept. 2 cut its forecasts for third-quarter revenue and profit margins as global demand slows for personal computers and mobile telephones.

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