Manufacturing customers are making it tough to predict end demand for microchips and hard to say whether an inventory correction is bottoming out.
Chief executive of Maxim Integrated Products Tunc Doluca has told Reuters that struggling economies in the United States and Europe have crimped demand for electronics. This has meant that many manufacturers to reduce high inventories of chips and other components.
But investors are looking for signs of whether the inventory adjustment is ending or could drag on due to economic uncertainty. Doluca knew some companies have called the bottom as the December quarter for this inventory correction. However he was not so confident that was the case.
Maxim builds specialized analogue chips that fetch higher prices but sell in lower quantities than more commoditised chips. Samsung Electronics is a top Maxim customer and the success of its smartphones competing against Apple's iPhones has helped make Maxim's mobile business its fastest growing. Components going into smartphones account for nearly a third of Maxim's revenue.
Fortunately for Maxim, smartphones and tablets appear to be mostly immune to the slowdown.