Ups and downs

Worldwide microchip sales of $18.3 billion in January were 0.5% below December sales of $18.4 billion but 17.5% higher than January of 2004 sales of $15.6 billion, the Semiconductor Industry Association (SIA) reported yesterday. SIA pointed that January is usually a weak month for microchip sales following the typically strong holiday season.

“The modest sequential sales decline of one-half of one percent in January is an encouraging sign,” said SIA President George Scalise. “January is historically one of the weakest months of the year for the microchip industry. We are encouraged by recent signs of strength in the overall U.S. economy, as evidenced by the 3.8% growth in gross domestic product (GDP) in the fourth quarter.”

Dan Hutcheson of VLSI Research has noted that when GDP grows by more than 3%, semiconductor sales have shown healthy growth except when there are excesses of inventory or production capacity. At the present time, neither production capacity nor inventory excess is a problem.