Infineon hit by the DRAM wars
German chip maker Infineon has fallen three positions in market analyst IC Insight's ranking of leading semiconductor companies for the first half of 2005. Intel remains by far the largest company while Freescale, which ranked 11th in the fullyear 2004 listing, has entered the top ten, moving into ninth position in 1H05. Six of the top 10 companies registered sequential declines in 2Q05 with the Japanese companies being especially hard hit. In total, the top 10 companies semiconductor sales declined 2% in 2Q05 as compared to 1Q05. Less than $100 million separated ninth-ranked Freescale from eleventh-ranked Philips in the 1H05 ranking. Moreover, using the 3Q05 outlooks from the three companies (Freescale, NEC, and Philips), only about $150 million is expected to separate their total semiconductor sales through the first three quarters of the year.
Weakness in the 2Q05 DRAM market was clearly evident from the 2Q05/1Q05 sales declines registered by Samsung and Infineon. However, illustrating that the DRAM market may have bottomed out, both companies are expecting moderate sales improvement in the second half of 2005. Compared to the full-year 2004 top-10 semiconductor supplier ranking, the top three positions are highly unlikely to change in 2005. However, the fifth to seventh positions are up for grabs. In 1H05, only $200 million separated the fifth ranked supplier, Toshiba, from the seventh ranked company, Infineon. There will also be stiff competition for the tenth spot between Freescale, NEC and Philips (Sony may also have a shot at the tenth position in 2005). It is interesting to note that when incorporating the top 10 companies outlooks for 3Q05, coupled with IC Insights estimates for their 4Q05 sales, the top 10 semiconductor companies are on track to post a 5.6% 2005/2004 semiconductor sales increase. Excluding Intel from the list, the remaining top 10 companies would post a 2.6% 2005/2004 sales increase. Both of these figures are very close to IC Insights 4 percent forecasted growth rate for 2005 worldwide semiconductor sales.
