Chip Sales on Upswing Worldwide

Buoyed by purchases of cell phones and other wireless devices, worldwide sales of semiconductors rose modestly in October, a trade group said Friday.

According to the Semiconductor Industry Association, figures compiled by World Semiconductor Trade Statistics (WSTS) show chip sales grew 1.8 percent to US$12.5 billion between September and October. The figures also show a 19.9 percent gain over October 2001 sales of $10.4 billion.

“It’s about in line with our expectations,” WSTS Americas vice chairman Bill Jewell told the E-Commerce Times.

Jewell said the figures are on par with WSTS’ forecast of 2.3 percent growth for all of 2002, after a devastating 32 percent drop in sales last year — the industry’s worst ever.

“If there are any doubts remaining about the strength of the global chip industry, a healthy recovery continues as we move into the fourth quarter,” Semiconductor Industry Association president George Scalise said. He pointed to an 8.2 percent gain in the third quarter as an indicator that the year will close with “steady but sustainable” growth.

Wireless in Asia Leads

The group credited strong wireless sales in Asia for the monthly increase. More than half of consumers in that region have replaced their phones with new ones that have improved color screen and Internet capabilities, and new subscribers have turned out in record numbers.

In total, chip sales in Asia rose 1 percent in October compared with the previous month, and 35.1 percent compared with the year-ago period. Japan saw a 2 percent increase during the month and a 21.4 percent jump from last year.

But growth in those areas is not necessarily indicative of new business.”It’s a real shift of revenues from other regions to Asia-Pacific,” said Gartner analyst Richard Gordon. “It’s not really adding to worldwide growth … it’s shifting it around regionally.”

The popularity of wireless components in general also lifted flash memory sales by 6.9 percent. At the same time, sales of digital signal processors, which power mobile phones, rose 4.4 percent.

European High Performance

Europe led the industry with a 6.2 percent gain — the biggest increase from September to October for any region, partially because of increased manufacturing and sales of cell phone components.

WSTS’ Jewell said the gain in Europe is part of a larger recovery in that area and is likely to continue.

In the United States and the Americas, however, October chip sales grew by just .5 percent compared with September, and by 5.2 percent compared with the year-ago period, making this the industry’s weakest region.

“A lot of business has been lost to Asia,” said Jewell.

PCs Key to Recovery

WSTS noted that PC chip sales remained the largest single market for semiconductors in October, representing nearly one-third of all sales. According to the organization’s figures, DRAM sales were up 1.2 percent, while microprocessors saw a 6.5 percent increase.

“Until the PC industry kicks back in, and we think that will happen, probably in the second half of the year, we don’t see a boom area in 2003,” said Gordon.

The WSTS represents 66 semiconductor manufacturers and counts Intel, AMD and IBM among its members.

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