Foundry Shipments to See Zero Growth in 4Q'06, Greatly Reduced Growth for 2006 As a Whole

 |  Includes: AMD, ASX, INTC, SMI, TSM, UMC
by: William Trent, CFA

The Big Boys are coming around on the chip slowdown. Once a few more are on board, the worst will be over.

As today's DigiTimes reports:

Foundry sales growth will be less significant in the second half of 2006, with zero sales growth likely to happen in the fourth quarter and overall foundry shipments only increasing 20% this year, compared to 30% on-year growth in the first quarter, due to an inventory pile-up at downstream industries of products such as graphics chips, according to a Morgan Stanley report, as quoted by the Chinese-language Commercial Times.

Yep. That’s what we said. Only it isn’t limited to graphics chips. DigiTimes reported in a second piece:

Advanced Micro Devices (NYSE:AMD) will launch a pricing campaign later this month, covering the full range of its product line, in head-to-head rivalry with Intel (NASDAQ:INTC), which is expected to lower the prices for its processors in July, according to sources with motherboard makers.

Semi comparative 1-yr chart:

Semi chart