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Electronics Production | June 08, 2005

Renesas and Toshiba Lead Semiconductor Growth in Q1

In a traditionally weak period for the global semiconductor industry, Japanese chip suppliers Renesas Technology Corp. and Toshiba Corp. bucked the trend by achieving respectable sales increases in the first quarter.
Renesas and Toshiba posted the largest rises in revenue among all the top-10 semiconductor suppliers in the first quarter compared to the fourth quarter of 2004. Semiconductor revenue at Renesas rose to $2.5 billion in the first quarter, up 10 percent from $2.2 billion in the fourth quarter, according to data from iSuppli Corp.’s Semiconductor Competitive Landscaping Tool.

Renesas’ strong performance relative to its close competitors allowed it to rise to the number-three rank, up from number six in the fourth quarter. Toshiba’s chip revenue expanded to $2.3 billion, up 8.6 percent from $2.1 billion in the previous quarter. The company rose to the number-five rank in the first quarter, up from seventh place in the fourth quarter.

Seasonal Weakness

The healthy results for Renesas and Toshiba contrasted sharply with the overall weak performance of the semiconductor industry in the first quarter. Global semiconductor revenue in the first quarter declined by 3.1 percent to $56.99 billion, down from $58.8 billion in the fourth quarter, according to iSuppli. Such a seasonal sales decline is typical in the global semiconductor industry, which usually experiences a slowdown at the start of the year after the peak holiday period in the fourth quarter.

Illustrating this seasonal weakness, only three of the top-10 semiconductor suppliers achieved sequential revenue growth in the first quarter, with Freescale Semiconductor Inc. of the United States being the third company. Freescale’s revenue rose to $1.4 billion in the first quarter, up a mild 1.2 percent from $1.38 billion in the fourth quarter.

ASIC, ASSP and Consumer Revenue Drive Sales Increases

Renesas’ and Toshiba’s revenue increases were driven to a large degree by rising sales of application-specific logic, i.e. ASICs and Application-Specific Standard Products (ASSPs). Renesas’ combined ASIC/ASSP revenues rose by $65 million, or 10.6 percent, in the first quarter compared to the fourth. Toshiba’s combined ASIC/ASSP revenues rose by $73 million, or 23.2 percent, sequentially.

The strong performance for the two semiconductor suppliers was broad based, with both companies managing to achieve revenue growth in all major semiconductor
application markets. One again, this contrasted sharply with the overall performance of the industry, where semiconductor revenue from five of the six big application markets declined sequentially in the first quarter.

Both companies distinguished themselves with strong growth in sales of
consumer-electronics-oriented semiconductors. Renesas’ sales to this area grew by $41 million, while Toshiba’s soared by $140 million. Data processing was another area of strong sales growth for the two firms.

European Chip Makers Lag

Among the top-10 semiconductor suppliers, European companies as a group suffered thesteepest declines in revenue on a sequential basis in the first quarter, with Infineon leading the way down with a 10.8 percent decrease. The German chipmaker saw its rank decline to sixth, down from fourth place during the previous quarter.

Franco-Italian chip supplier STMicroelectronics experienced the second-largest contraction in sales among the top 10, with its semiconductor revenue declining by 10.5 percent for the quarter. The company fell two positions in the ranking to seventh place. Dutch chipmaker Philips, in 10th place, posted the third-largest decline, with its chip revenue declining by 9.1 percent compared to the fourth quarter of 2004. Philips slipped one rank to the 10th position.

The Big Hang Tough

The top-two semiconductor suppliers, Intel Corp. and Samsung Electronics Co. Ltd., maintained their positions with growth that slightly exceeded the industry average. Revenue at U.S. microprocessor giant Intel declined to $8.7 billion in the first quarter, down 2.7 percent from $8.9 billion in the fourth quarter. South Korean memory colossus Samsung posted semiconductor revenue of $4.19 billion, down a mild 1.3 percent from $4.2 billion in the fourth quarter.

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