When processor maker Intel (NASDAQ:INTC)
announced its earnings recently, the chip giant did better than expected,
giving hope to some that the recession’s disastrous effect on technology sales
may be slackening. And now an analyst firm says that prognosis may get some
further support from Intel rival Advanced Micro Devices’ (NYSE: AMD)
earnings, which will be released on July 21.
FBR Research reports that its checks into AMD’s
supply chain and PC builds have revealed the company’s fortunes may be
changing. The firm’s checks with the top laptop ODMs and the top desktop
motherboard makers show that PC builds for AMD
grew by 7 percent sequentially for Q2, with Q3 PC builds expected to grow by
another 13 percent sequentially.
“We do think the company will report strong Q2 results and Q3 guidance on
Tuesday after the market close,” the firm says in a brief report. “Our new
distributor checks suggest Asian distributors had a stronger-than-expected June
quarter and are more positive about Q3 shipment prospects. In addition, recent
checks for AMD and the PC supply chain have
strengthened.”
The firm says that demand in Asia remains robust and
global PC shipments are rebounding.
More specifically, FBR Research says that
recent checks with Asian chip distributors suggest that Q2 sell-through
shipments grew 20 percent sequentially. That’s better than the firm’s checks
from the past three consecutive months, FBR
Research says. The firm adds that its Asian distributor contacts now expect Q3
chip sell-through shipments to grow 5 percent to10 percent quarter over
quarter.
Further, FBR Research says that AMD’s
recent production start checks have gotten better, increasing by 78 percent
quarter over quarter, compared with last month’s 63 percent. Q3 production is
now expected to grow 1 percent sequentially.
“We forecast AMD will generate about $160
million of free cash flow in the second half of fiscal 2010, a dramatic
improvement from the significant losses we expected three and six months ago,”
the firm says in a brief research note. “Although Taiwan Semiconductor's
inability to produce 40 nanometer chips at adequate yields has all but
eliminated AMD's time-to-market advantage
over NVIDIA, we nevertheless think AMD could
have a stronger second half of 2009 than investors expect.”
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