Worldwide sales of semiconductors declined slightly in June to $18 billion, a sequential decline of 0.5 percent from the $18.1 billion reported in May, the Semiconductor Industry Association (SIA) reported today.

But despite the dip, global chip sales finished strong for the first half of 2005, totaling $109 billion, a 6.5 percent increase year-over-year.

For the quarter ended June 30, sales totaled $53.9 billion, a sequential decline of 2.1 percent from the $55.1 billion reported in Q1. June sales were up 0.8 percent compared with the $17.8 billion reported in June 2004.

All told, the SIA remains optimistic that the semiconductor industry has endured the worst of the downturn.

“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 a statement.

“In addition, a portion of the decline can be attributed to differences in when sales are recognized by chipmakers and the WSTS (World Semiconductor Trade Statistics) organization. Most manufacturers do not recognize sales through distribution until the distributor ships the product to a customer. For statistical purposes, the WSTS organization records products as sold when they are shipped to a distributor,” Scalise said.
 
The SIA reported that most major end markets for semiconductors – including personal computers, wireless handsets, automotive applications and wired communications – saw Q2 unit sales substantially above expectations. Semiconductor manufacturing capacity utilization rose in Q2 after two quarters of sequential decline, and recent reports indicate utilization rates will continue to increase in the third quarter.

“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,” said Scalise. “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.”

Scalise noted that the U.S. gross domestic product (GDP) has been an excellent bellwether for the global semiconductor industry. “Last Friday [June 29], the Commerce Department reported second-quarter GDP growth of 3.4 percent – an indication of continued strength in the U.S. economy and a very good sign for the semiconductor industry,” he concluded.

By: DocMemory
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