Avago sees industrial chip orders at bottom

SAN JOSE Tue Dec 20, 2011 8:32pm EST

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SAN JOSE (Reuters) - Avago Technologies believes a correction in inventories of industrial chips is bottoming out and expects more complicated smartphones to drive demand for its filters and power amplifiers, its chief financial officer said on Tuesday.

As manufacturers cram more features using wireless signals like Bluetooth, Wifi and basedband into smartphones, they need more of the chips Avago makes, which keep different kinds of signals from interfering with each other, CFO Doug Bettinger told Reuters in an interview on Tuesday.

Asked about likely growth in Avago's wireless business in fiscal 2012, Bettinger said, "I'll be disappointed if it's not high teens or maybe 20 percent."

The company's chips have been found in Apple's newest iPhone, and Bettinger said Avago sells to the majority of major smartphone manufacturers in the world.

Avago's industrial business, which makes chips used to automate factories, is seeing sluggish demand as customers worried about European and U.S. economies trim their inventories.

Avago has forecast current-quarter revenue to be down between 10 and 14 percent versus the previous quarter.

"We're not seeing things rebound, but we're not seeing them get worse either," Bettinger said.

With consumers putting off purchases of personal computers, cameras and televisions, and governments delaying infrastructure projects, global semiconductor sales grew a paltry 0.9 percent this year, according to market research firm Gartner.

Telecom carriers' upcoming installations of new super-fast LTE networks will increase demand for Avago's chips as manufacturers build LTE transistors into new smartphones alongside older 3G features, said Bryan Ingram, senior vice president of Avago's wireless division, who participated in the interview.

"The (radio frequency chip) content you had in a phone two years ago is less than what it is today and it will be more in the future." he said.

(Reporting by Noel Randewich; editing by Bob Burgdorfer)

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