Worldwide chip sales in December dropped 3.5% sequentially to $18.4 billion, a sour ending note to an otherwise outstanding performance in 2004: a record $213 billion in sales, 28% growth from 2003 and surpassing the previous mark of $205 billion in 2000, according to the Semiconductor Industry Association (SIA).
Geographically, the Americas region led the month-on-month decline in December, down 6.2% to $3.24 billion. Two regions displayed year-on-year double-digit growth: Asia Pacific (25.4%) and Europe (13.5%), while Japan trailed all regions at 3.8% growth after ushering the market’s upturn more than a year ago. Based on a three-month moving average, Europe was the only region to show positive growth (5.3%); the Americas again slid the most (5.4%).
High gasoline prices did not gouge holiday sales of consumer electronics, noted SIA president George Scalise. In fact, “A moderation of gas prices coupled with good economic growth appears to have bolstered consumer confidence” — an important factor for the semiconductor industry, which has become increasingly reliant on consumer sales.
The SIA predicts sales in 1Q05 will decline by 4%-6% sequentially after an essentially flat $55.1 billion in 4Q04, as more excess inventory is worked off, and consumer spending trends down in a post-holiday seasonal pattern. Capacity utilization rates also are expected to decline modestly.