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Despite a 1.7 percent drop in worldwide microchip sales in January, the Semiconductor Industry Association (SIA) insists that sales will rise in 2002.
According to the SIA, worldwide sales of semiconductors were USD10.01 billion in January, a decrease of 1.7 percent from USD10.18 billion in December 2001. "For the past decade, with the exception of the year 2000, sales have been slightly lower in January because of the semiconductor industry's historical seasonality," stated George Scalise, SIA president. "We expect to see the industry record slow growth for the first quarter of 2002, with sales rising to double-digit growth in the second half of the year."
SIA says that sales are typically sluggish in January as a result of the slowdown in spending after Christmas purchases of PCs and consumer electronics. Of the four major markets, Japan experienced the greatest slowdown in January with sales off by 5.4 percent. In the Americas sales were down 0.1 percent, while in Europe sales were down 3.1 percent. In the Asia Pacific market, now the world's largest, semiconductor sales were on the rise, up 0.4 percent over December 2001.
"A number of growth trends in the Asia Pacific market are positive due to continued outsourcing to contract manufacturers located in the region," said Scalise. "We also are encouraged by the continued rise in prices from the lows recorded early in the fourth quarter in the DRAM market. The growth in microprocessor sales is another indicator of the ongoing strength in the PC market."
Although the SIA says the market for microchips will soon improve, the figures released on Tuesday by the organisation show just how dramatic the drop in demand has been. Sales have fallen a staggering 40 percent over the last 12 months from USD16.63 billion last year to USD10.01 billion in January 2002. The Americas and Japan have taken the hardest hits with both markets off by over 50 percent in the last year. In Europe sales are down from USD3.57 billion last year to USD2.13 billion currently, a fall of over 40 percent.
Meanwhile, Intel, the world's biggest semiconductor maker, is set to issue its closely watched mid-quarter update on Wednesday. While analysts do not expect the company to change its guidance, Morgan Stanley has upgraded Intel stock from a "strong buy" to "outperform." In its last forecast, six weeks ago, Intel said it expected revenues to come in between USD6.4 billion and USD7 billion. The positive outlook for the firm saw it shares rocket up USD0.85 to close at USD32.70 on the Nasdaq on Tuesday.
Last week the value of the chip sector was on the rise with the Philadelphia Semiconductor Index up around 18 percent over the last past six sessions. Other semiconductor winners on Wall Street on Tuesday included Vitesse Semiconductor, Applied Materials, ASM Lithography and KLA Tencor.
Advanced Micro Devices, Intel's biggest rival, was up USD0.50 on Tuesday to USD15.74 after the company claimed it had managed to outperform other chip makers in terms of growth, with revenue falling at half the industry rate last year.
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