News Article
Fabless outperforming IC sector
GSA Announces The Fabless Sector Outperforms The Overall Industry In The First Quarter
The Global Semiconductor Alliance (GSA) announced in its June release of the Current Economic Monitor that in Q1 2012 the fabless sector outperformed the overall industry which is still being negatively affected by the current economic and political situation. In addition to providing macro-economic analysis; analysis on funding, IPO and M&A activity; wafer and back-end pricing data; and executive and analyst forecasts, the Monitor analyzes the financial health of fabless companies and integrated device manufacturers (IDMs). Sales growth, gross profit margin, net profit margin and free cash flow are analyzed to indicate a company's financial health.
The semiconductor industry and its sales leaders yielded negative quarter-over-quarter (QoQ) and year-over-year (YoY) sales growths in Q1 2012. The fabless segment and its sales leaders followed the same trend QoQ; however, YoY they recorded positive sales growths. The fabless segment decreased 4.0% QoQ and increased 1.2% YoY, while the top 20 fabless companies combined for $13.3 billion, a 2.7% decrease QoQ and a 8.6% increase YoY.
The average gross profit margin of the 164 fabless and IDM companies that publicly reported Q1 2012 gross profit margin was 37.7%. Eighty-eight companies reported a Q1 2012 gross profit margin higher than the average, possibly indicating that over 50% have been successful in their initiatives to cut costs and are able to sustain growth over time "“ a good sign for the market. 85% of these companies were fabless.
The average net profit margin of the 166 fabless and IDM companies that publicly reported Q1 2012 net profit margin was -14.4%, indicating that the industry might be having a difficult time controlling costs. The average net profit margin of the 98 companies that reported a positive margin was 12.1%. Thirty-nine companies reported a Q1 2012 net profit margin higher than the 12.1% average. 92.3% of these companies were fabless.
Of the 144 fabless and IDM companies that publicly reported Q1 2012 free cash flow, 82 companies reported a positive cash flow, indicating that over 50% are building their cash reserves and are able to develop new products, acquire companies, reduce debt, enhance shareholder value and grow into the future. 79.3% of these companies were fabless.
