June 6, 2004 – Still-rising utilization rates and healthy economic growth in the US and China added up to another monthly boost in global semiconductor demand, according to data from the Semiconductor Industry Association (SIA).

Worldwide chip sales (a three-month average) grew 2.1% in May to $17.32 billion, the highest monthly level since December 2000, and a 37% increase from May 2003. Year-on-year, sales growth climbed above 30% for the fourth straight month. Helping boost chip sales was a continued increase in utilization rates, up to 94% overall in 1Q04 and 99% for leading-edge manufacturers (0.16-micron and smaller process technologies).

Actual sales were $16.82 billion, up 39.1% from a year ago. For the first five months of the year, sales were $81.46 billion, up 35.2% from the same period a year ago.

Overall, most product segments held true to seasonal patterns, although the SIA noted particular demand for chips used in wireless communications (DSPs, optoelectronics devices, and ASSPs), reflecting strong sales of cellular phones incorporating display, imaging, and data capabilities. Geographically, all regions increased overall by 2.1%, once again led by the Asia-Pacific region (4.5%), with Europe the only region to show a decline (-1.2%). Year-on-year growth ranged from 25%-54%.

“Customers appear to be managing inventories prudently even in the face of supply-demand constraints,” said SIA president George Scalise. The industry fundamentals continue to look good, he noted, pointing to strong growth through the remainder of the year.