Semiconductor Sales Bring Market Optimism

Global semiconductor sales picked up in the second quarter of 2009, as Intel reported solid financial results and the forecasts for the PC and handset markets showed new signs of life, according to a report by the Semiconductor Industry Association.

The SIA’s Aug. 3 report found that worldwide chip sales hit $51.7 billion (£31bn) in the second quarter of 2009, an increase of 17 percent from the first quarter of this year when sales stood at $44.2 billion. In June, processor sales topped $17 billion, an increase of 3.7 percent from May.

While the latest SIA report is good news for the semiconductor market, as well as a positive sign of the overall health of the global IT market, the research also shows how far the market has fallen off since the recession took hold in 2008.

In the second quarter of 2008, global semiconductor sales topped $64 billion. For the first six months of 2009, worldwide chip sales stood at about $96 billion, a 25 percent decrease from the first six months of 2008.

In its analysis, SIA found that chips sales were helped when companies such as Intel, Advanced Micro Devices and Texas Instruments began adjusting their processor inventories and reducing the prices of older chips.

In addition, SIA found that with the handset and PC markets adjusting some of their previous forecasts, the market seems right for semiconductor revenue to bounce back later this year and into 2010.

“Consensus estimates for unit sales of PCs are now in the range of minus 5 percent to flat compared to 2008, whereas earlier forecasts were projecting year-on-year unit declines of 9 to 12 percent,” SIA President George Scalise wrote in the report. “In cell phone handsets, analysts now believe the unit decline will be in the range of 7 to 9 percent compared to earlier forecasts of a decline of around 15 percent. PCs and cell phones account for nearly 60 percent of worldwide semiconductor consumption.”

In July, the world’s leading supplier of chips for PCs and servers, Intel, reported solid second-quarter financial results and many of the company’s executives said they believe the worst of the recession is now behind the industry. However, AMD reported a slow quarter, although executives there said they believe the company and industry could bounce back later in 2009.

Regarding the global market, SIA found that China’s economic stimulus package, along with an expanding 3G network, has helped increase hardware sales, and that provided a boost for chip sales.

In a separate report released 3 Aug, Deutsche Bank analysts stated that the semiconductor industry, including memory makers, will have a down year in terms of revenue, but the downturn is not expected to be as severe as first thought.

“We maintain our 2009 forecast for industry revenue to decline by 20 percent [year-over-year] but expect revenue could be down only 15 percent if the pace of recovery quickens,” Deutsche Bank wrote.