SIA: January sales dip, but better than usual

March 2, 2006 – Worldwide sales of semiconductors dipped 7% in January to $18.38 billion, but a 1.5% sequential decline from December is slightly better than the usual 2.2% year-opening slide, according to data from the Semiconductor Industry Association (SIA).

By region, the Americas and Japan eked out tiny gains in chip sales during January, to $3.72 billion and $3.65 billion, respectively, with Europe falling 3.9% to $3.19 billion, and Asia-Pacific down 2.2% to $9.11 billion. Year-on-year, both the Americas and Asia Pacific regions showed 16% growth, with Europe off by 8% and Japan nearly 6%.

Based on a three-month moving average, chip sales during Nov.-Jan dipped 2% from the prior three-month period, to $19.66 billion. Only the Americas showed sales growth (3.4%), while Europe saw sales decline 6.8% during the past three months.

“The new year got off to a good start for the global semiconductor industry with strong year-on-year growth in a historically weak month,” said SIA president George Scalise, noting that relatively strong retail sales in January helped dampen the expected seasonal decline in sales. He also pointed to “signs of recovery” for networking equipment, and optimistic reports from PC and cell phone manufacturers.

Scalise also pointed to positive indicators such as no excess inventories, strong end-market demand, and extremely high capacity utilization rates. He noted that overall capacity utilization rates rose to 92% in 4Q05, and were 99% for ?0.12µm process technologies. Capital expenditures are projected to increase 4%-6% in 2006, in line with semiconductor sales estimates, thus balancing capacity expansion with demand, and negating any excess capacity issues, noted Scalise. The SIA is maintaining its prediction for a relative flat 1Q06, with possible 1% swing up or down vs. 4Q05.

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