Chip Sales Keep Up the Pace

If the rest of 2003 is anything like the first five months, the Semiconductor Industry Association (SIA) says it should have no trouble reaching its double-digit estimates for the year.

Based on its Global Sales Report, the San Jose, Calif.-based trade group says May marks the third in a row with good strong growth. The survey said worldwide chip sales totaled $12.50 billion in May 2003. That is up 2 percent from the $12.26 billion in revenue reported a month earlier and up 9.9 percent from May 2002 revenue of $11.38 billion.

The three-month moving average of sales activity is tabulated by the World Semiconductor Trade Statistics (WSTS) organization, which represents approximately 66 companies.

“SIA’s forecasted growth of 10.1 percent for the year 2003 is on track, with this uptick in May,” SIA President George Scalise said in a statement. “As SARS and the geopolitical issues come under control, we expect to see demand in all geographic sectors, especially China, strengthen in the second half of the year.”

Before the SARS outbreak and heightened tensions overseas, the SIA had predicted 19 percent growth but the industrial base did not materialize.

The group says sales of programmable logic and standard cell chips increased 8.6 percent in May indicating an anticipated pickup in telecom spending, while in the wireless sector, Flash memory [define] was up 4.4 percent, and in the computation sector ASSPs (application-specific standard product) were up 3.7 percent, DRAMs [define] up 2.5 percent, and optoelectronics were up 6.3 percent.

While Asia leads the world in chip consumption, sales in Japan rose 26 percent on a year-over-year basis, Asia Pacific was up 11.7 percent, and Europe was up 9.3 percent, while sales in the Americas market declined by 6.7 percent as the outsourcing of electronic equipment production to Asia continues.

The SIA released its 2003-2006 midyear forecast, projecting a compound annual growth rate of 9.8 percent over the forecast period. Beyond 2003, the trade group expects worldwide sales of semiconductors to hit 16.8 in 2004, 5.8 percent in 2005, and 7.0 percent in 2006. The SIA expects industry sales to grow from $141 billion in 2002 to $205 billion in 2006.

The three-month increase in chip purchases may help support recent analyst predictions that 2004 will be the banner year for companies to upgrade their PCs and servers