Smartphones Spur Growth In Chip Sales

Global semiconductor sales increased 5.3 percent in July, thanks to consumers buying more handheld devices, such as smartphones and cell phones, as well as PCs, according to a 31 Aug report from the Semiconductor Industry Association.

In July, worldwide chip sales hit $18.2 billion in revenue compared with $17.2 billion in June. However, the first six months of 2009 saw chip sales decline 25 percent from those of the previous year, and July chip sales were 18.2 percent lower than those of July 2008, according to SIA.

Still, the news is good for an industry that has struggled as both consumers and businesses cut back on the amount of hardware such as PCs and cell phones that they purchase. The SIA report also followed an encouraging report from Intel, the world’s biggest producer of x86 processors for PCs and server systems.

On 28 Aug, Intel announced that it would increase its third-quarter financial forecast to reflect an unexpected demand for its processors and chip sets. While Intel executives previously expected revenue between $8.1 billion and $8.9 billion for the third quarter, they are now expecting the quarter’s revenues to fall between $8.8 billion and $9.2 billion.

The increase in chip sales is being driven by the consumer market. The SIA report found that consumers have started buying more PCs, especially netbooks or low-cost mininotebooks, as well as handheld devices such as smartphones and cell phones.

“Sales of consumer products such as netbook PCs and cell phones are supporting the modest recovery in demand that is now under way,” SIA President George Scalise wrote in a statement.

However, the SIA report found that large enterprises are not buying IT hardware, such as corporate PCs and server systems. The SIA report concluded that many IT administrators are cautious about what hardware they are buying and businesses have increased their hardware replacement cycles in order to save money.