August 12, 2009

Gauging the fallout from the Tessera ruling

Converge Semiconductors and Integrated Circuits Update.

Overall, general IC activity has remained relatively flat compared to last month. However, the shortages discussed in last month’s Market Insights report for the Xilinx Virtex 5 product line continue, as do those mentioned from TI, Altera and Freescale. Activity for ST Micro has increased over the last several weeks, most likely out of concerns regarding the ITC's Tessera ruling. Consumer/telecom demand is still subdued, but demand in the industrial PC and embedded technology sectors are showing some signs of life.

Fallout from the ITC's Tessera ruling has been difficult to gauge, as specific information regarding the judgment has been slow to emerge. Some suppliers have adhered immediately to what they perceive will be the strictest letter of the law, while others have been quick to move inventory to make it available for sale in anticipation of enforcement. In addition, increased customs enforcement by nations in Asia and Europe have made it much more difficult and time-consuming to move certain products, including FPGAs, from one region to another. Converge is advising our customers to add an additional one to two weeks to lead times on parts originating from these countries.

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