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May 19, 2009

Mobile chip firms view rise in second quarter

But no sign of recovery in consumer demand?

By CBR Staff Writer

ARM, the leading chip designer informed that chip sales had recovered in the second quarter of 2009 but the rise was because of customers rebuilding inventory instead of a recovery in consumer demand. But the wireless chip firms ARM and ST-Ericsson were uncertain about the rest of the year.

Warren East, chief executive of ARM said: There are no underlying catalysts for people to go out and buy consumer electronics. Talking to customers we can see that Q2 is looking better. This improvement appears to be inventory correction and nothing more at the moment.

Britain’s ARM figured that the semiconductor market was improving from a 30% drop in Q1 but would still be down by between 20% and 30% for the year.

Mr. East said, It will be probably worse than minus 25%. There is an inventory bounce going on now but I don’t think it will be sustained going into the back half.

ST-Ericsson viewed a return in demand after the inventory clean-up first quarter decline, according to Reuters.

Alain Dutheil, chief executive of ST-Ericsson said: From Q1 on, the demand will follow the usual seasonal pattern. Visibility for the rest of the year, Q3, Q4, is still very poor.

Overall, the cell phone market saw the weakest ever quarter in January to March and is expected to drop more than 10% more this year.

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