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Components | September 07, 2011

Fairchild lowers 3Q/2011 guidance

Fairchild Semiconductor revised guidance for the third quarter of 2011. Fairchild now expects sales to be USD 400-410 million compared to previous guidance of USD 433-446 million.
Adjusted gross margin is expected to be in the range of 36.0 to 36.5%, down from the previous guidance of 36.5 to 36.9%. We expect R&D and SG&A spending to be about USD 96 million compared to our previous guidance of USD 99 million.

"Distributor sell through of our products has been lower than expected and we are reducing our shipments into the channel accordingly," said Mark Thompson, Fairchild's president and CEO. "Demand from OEM customers has remained stable and we expect to record modest sequential sales growth to direct customers in the third quarter. In the distribution channel, sell through has yet to show signs of the normal seasonal increase in a number of end markets including computing and consumer. Sell through has also been below expectations for appliances as some Asian customers reduce inventories. As expected, we continue to see weak demand from the solar inverter market as well. Given the uncertainty in the demand environment, we decided to aggressively and proactively adjust our supply chain now to maintain lean inventories, especially in the distribution channel. We are also controlling expenses tightly which is reflected in our lower guidance for R&D and SG&A spending.

"While we are dealing with demand weakness in some end markets, I am encouraged by our share gains in the mobile analog business," stated Thompson. "We expect solid sales growth for mobile analog products in the third quarter due to design wins and numerous new product launches. We are confident that this combination of share gains in analog coupled with long–term secular growth in high voltage solutions will enable us to grow sales significantly in the coming years."

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