AMD’s volume ramp off the rails
Editor's Blog: July 2007
Monday, 02 July 2007
Soitec, AMD's main 300mm SOI wafer supplier, is not the only one having a difficult time anticipating when the microprocessor company will kick in with significant volume production of quad-core chips in 2007.
In May of this year, the company revealed that its first quarter results wouldn't be good as inventory burn was still ongoing amongst key clients. But the ray of sunshine that was AMD's Barcelona platform was anticipated to be a boon for the wafer supplier in subsequent quarters.
For obvious reasons, Soitec has had to balance telling investors about what is happening to its business with avoiding antagonizing large technology-dependent customers by revealing too much.
In May it was clear from Soitec's remarks that the second half of the calendar year would be flat but that the full year should be good. Don't forget that Soitec saw nearly 70 percent revenue growth from 300mm wafers in its 2006 financial year, so flat couldn't be that bad, could it?
Not now, it would seem!
In a statement issued today, Soitec has warned that revenues will be down 15 percent in the first half of the financial year, which equates to nearly 20 percent in absolute terms due to the dollar exchange rate factor.
Why the sudden fall in earnings expectations?
Soitec's success has not just been dependent on AMD. All three major games consoles use SOI wafers and the most recent launches by Nintendo and Sony have shipped in their millions since recent launches.
Even though Nintendo has out-stripped Sony, I doubt the estimates of SOI demand would differ much. The only difference should be that the name on the shipping order quantities would just be different than previously expected.
In the meantime, Xbox sales have settled down, as foundry orders at Chartered are in decline since soon after the launch, and with IBM able to handle the bulk of orders.
So who is struggling enough to hit Soitec's previous revenue projections?
The answer is in the prepared Soitec statement:
New products launched by main customers come on stream in the second half of the year but given the current uncertainty with regard to the timing of the ramp-up in volume of these products, the Group cannot exclude that full year sales may be below the prior year.
This comment really only relates to AMD, and trust me on this one, okay?
The key is volume ramp. AMD is the only Soitec customer that has major new products coming on-stream in that time. These products can equate to real volume ramp and could, in turn, impact the company's revenues by such a degree.
So, in conclusion, the Barcelona volume ramp is delayed. Of more concern, though, is Soitec's unclear view as to when such a ramp will actually happen. That's the big new problem for both AMD and Soitec.
Indeed, for Soitec, the delayed and unspecified timing of the AMD ramp could impact its full-year revenue guidance, and that is not due to happen until 2008, such is the uncertainty!
From Soitec's guarded comments, it's clear that even they see the Barcelona ramp is off the rails!
![[TLR]Snoopy](/community/data/avatars/m/20/20196.jpg?1577437178){kind=avatar}
