Nokia forecast rattles GaAs chip stocks
Nokia, the world s leading maker of cell-phone handsets, and therefore one of the world s largest consumers of GaAs chips, has rattled the industry with its downbeat forecast for 2009.
The Finnish company, which accounts for around 40 per cent of all handsets sold, is now expecting total industry volumes to peak in 2008 and decline next year.
Although Nokia s is only a preliminary estimate, and the company did not detail how much of a slump it anticipated, the impact on GaAs manufacturers was an immediate one.
Shares in Skyworks Solutions, RF Micro Devices and TriQuint Semiconductor, whose fortunes are strongly linked to Nokia and the other leading cell phone makers, fell by between 10 and 20 per cent as investors digested the news.
If Nokia s prediction is, as usual, an accurate one, 2009 would see the first annual decline in handset sales since 2001, when there was a 3 per cent drop (see related article).
Because GaAs-based power amplifiers and light-emitting diodes now feature in virtually all cell phone handsets, the market for compound semiconductor devices is strongly linked to Nokia s forecast.
And, since 2001, when around 400 million handsets were shipped, the market has trebled in size to a remarkable 1.2 billion units - with GaAs companies reaping the benefits.
In the current quarter, usually the strongest of the year, Nokia expects 330 million unit shipments. Although this is below previous expectations, it will still represent a sequential increase from the figure of 310 million recorded in the third quarter.
Nokia reckons that 1.24 billion handsets will sell in 2008 altogether, up nearly 9 per cent from the 1.14 billion registered in 2007.
Prior to today s announcement from the company, GaAs manufacturers had said that it was too early to tell what impact the global financial crisis would have on the compound semiconductor industry.
Nokia s forecast is one of the first pieces of concrete evidence for makers of GaAs components, and will no doubt have a ripple effect throughout the rest of the industry supply chain.