Chip recovery stalls

Worldwide semiconductor sales totalled $11.8 billion in February 2003, a 3.3% decrease from the $12.2 billion in revenue reported in January 2003 and an 18% increase from the $10.0 billion recorded in February 2002.

Worldwide semiconductor sales totalled $11.8 billion in February 2003, a 3.3% decrease from the $12.2 billion in revenue reported in January 2003 and an 18% increase from the $10.0 billion recorded in February 2002, the Semiconductor Industry Association (SIA) reported today.

‘The recovery in the semiconductor industry that has been underway for more than fifteen months appears to have stalled in February,’ said SIA President George Scalise.

‘Demand has softened in the markets that drove growth throughout the past year, including PC’s, global wireless and consumer. The traditional seasonally flat first quarter has been further impacted this year by geopolitical uncertainty. We expect demand to strengthen as we approach the second half of the year resulting in growth for the year in double digits,’ Scalise stated.

He went on to say ‘although capacity utilisation at the leading edge is a strong 89%, excess capacity at the trailing edge is exerting pricing pressure and impacting revenue across the market at this time.’

On a unit volume basis, year-over-year chip sales have continued to rise by double digits for the past ten months, with an average of 25% per month from July of 2002 through February of 2003. Year over year revenue comparisons also remain favourable, as the industry has climbed out of the downturn, with an average 18-20% gain over the seven months through February 2003.

Sales in all geographic markets were down sequentially in February. Year-over year sales in February rose 17% in Europe, 35% in Japan and 26% in the Asia Pacific market, now the world’s largest chip consumption market with a 36% share.

Sales in the Americas market year over year were off 4.5%, reflecting the continued outsourcing of electronic equipment production and component purchases to Asia, particularly China. Total electronic equipment production in China is forecast to double in four years, from $130 billion in 2002 to $252 billion in 2006, while component purchases by contract manufacturers in China are forecast to triple, rising from $35 billion to $100 billion over the 2002 to 2006 period.

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