* Company sees end to inventory reduction
* TI CEO says chip demand will rebound
* Broadcom points to shifts in smartphone market share
By Noel Randewich
SAN FRANCISCO, Feb 14 Texas Instruments
is expecting the chip industry to see a "sharp
snap-back" in demand once a major inventory correction is over,
Chief Executive Richard Templeton said.
Chip companies including TI and rival Broadcom Corp
have suffered in recent quarters from a slowdown as
manufacturers across the board reduced their chip inventories
due to concerns that economic weakness could hurt demand.
Speaking at a Goldman Sachs conference, Templeton said it
was not yet clear if the decline in inventories had ended in the
fourth quarter, but he said that if it had not happened then, he
would expect a bottom this quarter.
Templeton said the drop in chip unit shipments that began in
July last year was one of the worst in the past decade. Only in
2001, after the dot-com stock bubble burst, and in 2009,
following the U.S. financial crisis, were inventory corrections
more drastic, he said.
"You watch those unit shipments drop and then you watch
those unit shipments go skyrocketing up, literally in the next
two quarters, because our supply chain always overreacts," he
"Everybody is going to realize they overcompensated, their
inventories are lean, they don't have enough product, and it'll
go back and do a pretty sharp snap-back."
Investors have been buying up chip stocks on expectations
that manufacturers of smartpones, cars and network equipment are
about to ratchet up their orders for semiconductors.
The Philadelphia semiconductor index has gained 16 percent
so far in 2012, outperforming the Dow Jones industrial average's
5 percent increase.
At the same event, Broadcom Chief Executive Scott McGregor
said that not all of the inventory correction were related to
economic concerns as some phone makers were running inventories
deliberately low, partly due to shifts in market share.
While smartphones employing Google's Android platform are
more widely used than Apple's iPhone, the market is
fragmented, with Samsung leading the way and companies including
HTC struggling to captivate consumers.
Texas Instruments had said customers in a broad array of
sectors were started to replenish depleted inventories when it
reported higher-than-expected fourth-quarter chip sales last
Broadcom also posted stronger-than-expected quarterly
earnings in January, and it set a target for this quarter that
was slightly higher than Wall Street had expected.