Chip sales slip

Worldwide sales of semiconductors declined slightly in June to $18.0 billion, a sequential decline of 0.5 percent from the $18.1 billion reported in May, the

(SIA) reported recently.

June 2005 sales were up by 0.8 percent from the $17.8 billion reported in June 2004. For the first six months of 2005, global chip sales totalled $109.0 billion, an increase of 6.5 percent over the first six months of 2004, when total sales were $102.4 billion. Sales in the second quarter of 2005 came in at $53.9 billion, a sequential decline of 2.1 percent from the $55.1 billion reported in the first quarter.

“The nominal decline in global semiconductor sales in June was caused in part by inventory adjustments in the distribution channel and price attrition in DRAMs,” said SIA President George Scalise. “In addition, a portion of the decline can be attributed to differences in when sales are recognised by chipmakers and the WSTS (World Semiconductor Trade Statistics) organisation.”

“Most manufacturers do not recognise sales through distribution until the distributor ships the product to a customer. For statistical purposes, the WSTS organisation records products as sold when they are shipped to a distributor,” added Scalise.

“We are encouraged by the fact that sales for the first half of this year were up by 6.5 percent over the same period of 2004,” Scalise continued. “The strongest growth in 2004 occurred in the first half of the year. In contrast, we expect the strongest growth in 2005 will occur in the second half of the year.”

The SIA reported that most major end markets for semiconductors, including personal computers, wireless handsets, automotive applications, and wired communications saw unit sales substantially above expectations in the second quarter.

Semiconductor manufacturing capacity utilisation rose in the second quarter after two quarters of sequential decline, and recent reports indicate utilisation rates will continue to increase in the third quarter.

Scalise noted that the United States GDP (gross domestic product) has been an excellent bellwether for the global semiconductor industry. “Last Friday, the Commerce Department reported second-quarter GDP growth of 3.4 percent – an indication of continued strength in the

economy and a very good sign for the semiconductor industry,” Scalise concluded.