Chip Sales Slump By 30 Percent

Worldwide chip sales plummeted by 30 percent in the first quarter of 2009, according to the Semiconductor Industry Association, despite sales remaining strong in netbooks and smartphones.

A slump in users buying laptops, enterprise computing devices and gadgets caused semiconductor sales to fall from $62.8 billion (£42 billion) in the first three months of 2008 to $44 billion (£29.5 billion) during the first quarter of 2009. Chip sales also declined 15.7 percent from the fourth quarter of 2008 to the first quarter of 2009.

There were some good signs in the SIA report. Semiconductor sales increased more than 3 percent between February and March of this year. Sales of smartphones, such as the Apple iPhone and BlackBerry phones from Research In Motion, helped the overall market. In addition, sales of netbooks or mini-notebooks also helped increase the demand for chips.

However, other industries are cutting back on their purchases of chips, which could lead to tough times ahead for the semiconductor industry.

“The modest sequential rebound in worldwide sales in March suggests that demand has stabilised somewhat, albeit at substantially lower levels than last year,” SIA President George Scalise wrote in a statement.

“While all major product sectors showed month-on-month growth, there continues to be limited visibility in end markets,” Scalise added. “There are some bright spots such as ‘smartphones’ and ‘netbook’ PCs, but there are no clear signs of early firming of demand in other major end markets such as automotive, corporate information technology and consumer electronics.”

For now, the SIA does not see a major turnaround in the semiconductor industry until 2010, when some of the money from the stimulus package in the United States makes its way through the larger global economy.

When Intel released its latest quarterly report in April, CEO Paul Otellini said the world’s PC industry hit rock bottom in the first quarter of 2009, and he hoped the industry was poised for a comeback. Within the x86 chip market, Intel remains the leader when it comes to processor shipments, according to Mercury Research.

An April 30 report from Mercury also found that x86 chip shipments had slowed down in the first quarter of 2009, but that the market may revive itself in the second quarter.