When there is too much inventory out there, you need to lower prices on the stuff you have to make it move. It stands to reason, then, that a new low-price unit isn’t exactly what is needed. So delaying its launch makes sense.
Today's DigiTimes reports just that:
Texas Instruments (NYSE:TXN) and Silicon Lab (NASDAQ:SLAB) will postpone their scheduled volume production of “ultra-low-price” handset chips until the first quarter of next year, according to today’s Chinese-language Commercial Times quoting sources in the semiconductor industry. In May, the paper noted that TI would mass produce “ultra-low-price” handset chips from October 2006 while Silicon Lab’s volume production will commence in July 2006.
Update: The counter-argument to this is Qualcomm’s (NASDAQ:QCOM) guidance upgrade. Of course, higher than expected shipments could just be adding to inventory. We’ll know one way or the other in a quarter or two.
Wireless technology company Qualcomm Inc. on Tuesday raised its quarterly earnings forecast as shipments for its mobile station modem [MSM] chips grew more than 50 percent during the period.
Qualcomm said it expected fiscal third quarter revenue, before special items and share-based compensation, of $1.91 billion to $1.96 billion, compared with a previous forecast of $1.77 billion to $1.87 billion.
TXN-SLAB 1-yr comparison:
QCOM 1-yr chart: