Did Microchip Technology get ahead of itself last week by suggesting that its downward revenue forecast was a negative bellwether for the whole semiconductor market? Or is there a macro-economic weakness, foreshadowed by Microchip, that bodes ill for the chip industry?
Some in the industry are now describing signs of decline in the current quarter as “seasonal.” Others are calling it “a cycle” but not a correction.
Intel Corp. and Linear Technology both stressed during their earnings calls this week that they see nothing out of the ordinary that might signal an emerging industry correction predicted by Microchip CEO Steve Sanghi.
With $371.1 million in revenue, Linear reported 9% growth in its business from a year earlier. The company also increased its net income 20% to $129.5 billion. Linear’s revenue increased from the previous quarter, though just by 1.5%. The company’s net income decreased by $0.3 million.
However, Linear did mention a few signs of softness. It reported that bookings were down from the previous quarter, and the book-to-bill ratio was marginally lower.
Paul Coghlan, Linear’s chief financial officer, did report “a decline in the distribution booking, particularly in the United States.” However, he said that the negative book-to-bill ratio was “close to parity and generally similar” to what the company experienced last year. “The slowdown of this quarter feels to us more seasonal than structural.”
The CFO did acknowledge softness in global macro-economic conditions, calling them “although improved, not robust.” He also referred to weakness in Europe in particular, with Ukraine being the big issue.
