Another Sign of Too Much Chip Inventory (QCOM, SLAB, TXN)

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 (TXN) and Silicon Lab (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 (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: