Global semiconductor sales strong in Feb. 05; chip sales up 16% from Feb. 04

April 5, 2005 – Worldwide microchip sales of $18.1 billion in February were 2% below the revised January sales of $18.4 billion but 15.8% higher than February 2004 sales of $15.6 billion, the Semiconductor Industry Association (SIA) reported today. SIA noted that February is normally one of the weaker months for microchip sales.

The group also reported that the World Semiconductor Trade Statistics (WSTS) organization revised upward the three-month rolling average number previously reported for January. Data released last month indicated a slight sequential decline in sales. The revised data indicate that January sales were essentially flat with December sales.

“Worldwide sales of semiconductors have been stronger than expected during first two months of 2005,” said SIA president George Scalise. “Flat sales in January followed by a modest sequential decline in February are actually encouraging signs given that these two months are normally slow periods for the industry. Despite record gasoline prices, retail sales have continued to grow.”

Scalise noted that consumer spending patterns have become increasingly important to the worldwide semiconductor industry. The SIA estimates that half of all semiconductor consumption in 2004 was driven by purchases of products by individuals.

“The semiconductor content of a vast array of products purchased by individual consumers – from automobiles to personal communications devices and home entertainment systems – has risen dramatically in recent years. As a result, our industry is paying closer attention to indicators of consumer confidence. At this time, those indicators appear to be positive.”

“Sales of personal computers and wireless handsets have increased from the same period of 2004,” Scalise continued. “Relatively strong sales of PCs and cell phones have led to year-on-year sales growth for microprocessors (up 11% from February 2004), DRAMs (up 36%), and application-specific circuits for wireless applications (up 53%).”

Scalise said excess inventories are no longer a factor in industry sales. “According to iSuppli, excess inventories have continued to decline from $1.6 billion at the end of the third quarter of 2004 and will be at $0.7 billion at the end of the first quarter of 2005.

“The overall health of the global semiconductor industry remains strong. If the current trends continue, our forecast for flat industry sales for 2005 could prove to have been overly cautious,” Scalise concluded.


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