TSMC is a bellwhether for the semiconductor industry and Gerra said the foundry could see its manufacturing utilization rates drop to their lowest percentage in five years as a result of the low order intake.

Gerra said the TSMC checks he had made were consistent with a below-seasonal fourth quarter and suggested that there is a downside risk to semiconductor estimates for 4Q08/2009 as the supply chain reduces inventory levels through year-end.

Gerra added that apparent strength in the Asian market could be illusory. "Additionally, our recent meetings in Asia have pointed to a disconnect between 3Q order ramps and actual end-demand, which will likely lead distributors to cut component orders starting in October while the entire technology supply chain is dedicated to exiting the year with minimal inventory levels," Gerra said in a note to clients.

Of the three major end markets, PC, mobile phone and consumer electronics, Gerra said the PC market was proving the most robust. The PC market has tracked in line with seasonality during 2008 with the ultra-low cost notebooks being a growth trend for 2009. Gerra is more cautious about the mobile phone market while consumer electronics is tracking below seasonal norms, he said.

By: DocMemory
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