September 9, 2004 – Chip sales growth is slowing down, according to the latest monthly figures from the Semiconductor Industry Association (SIA), but the group indicates we should be neither surprised nor alarmed. Worldwide chip sales rose 1% in July to $18.00 billion, a 37.9% hike from July 2003.

The number is slightly below last month’s 40.3% pace, but still the sixth consecutive month of >30% year-on-year sales growth.

Through July, worldwide chip sales were $117.51 billion, compared with $87.30 billion for the same period a year ago, for a 34.6% growth clip.

Data seems to indicate that the peak of the upturn has occurred. Sales growth rates in July slowed sequentially in all geographic regions except for Europe — which grew 1.3% to end a two-month skid and reclaim March sales levels.

SIA president George Scalise pointed to consumer uncertainty, inventory accumulation in key sectors, and seasonal issues in some markets generated modest sequential sales growth in July.

The SIA maintained its earlier forecast of 4%-6% sequential growth in 3Q04. If end markets such as PCs, consumer electronics, and automobiles continue following normal seasonal patterns, Scalise still expects “solid growth rates” for the semiconductor industry through the remainder of the year, resulting in approximately 28% year-on-year growth in 2004 to $214 billion in sales.