Global Chip Sales Hit $61B in Q3

In another sign that the IT industry is preparing for a turnaround, worldwide chip sales increased about 19 percent from the second to the third quarter of 2009, according to research from the Semiconductor Industry Association.

Global chip sales hit $61.9 billion in the third quarter of 2009, an increase of 19.7 percent from the second quarter, when revenues totaled $51.7 billion. Still, SIA reported that semiconductor sales fell about 10 percent year over year, indicating that a full recovery is still many months away.

From August to September, global chip sales increased about 8 percent to $20.1 billion, according to SIA's Nov. 2 report.

During the third quarter, which ended Sept. 30, chip revenues were helped by better-than-expected sales of desktops, laptops, cell phones and smartphones In addition, the SIA report found that semiconductor sales from larger IT hardware, such as storage and server systems, had increased during the past quarter.

While chip sales were down year over year, the third quarter performed with normal seasonality, suggesting that the chip market, as well as the overall IT hardware market, has stabilized.

"Unit sales of personal computers and cell phones—the two largest demand drivers for semiconductors—continue to run ahead of earlier forecasts," SIA President George Scalise said in a statement. "Meanwhile, demand for semiconductors for industrial applications—a sector that had declined sharply—showed initial signs of recovery."

In recent weeks, Gartner and IDC both issued reports that showed the global PC market picking up steam in the final months of 2009. In addition, Intel and Advanced Micro Devices, the two largest producers of x86 processors for PCs and servers, reported during their third-quarter financial results that they had seen increasing demand for PCs and servers during the past several months.

However, enterprise spending on hardware is not expected to start until 2010, although the recently released Microsoft Windows 7 should help holiday sales of consumer PCs. A slate of new cell phones and smartphones, including the endlessly hyped Motorola Droid, should also help this holiday season.

Analysts and other industry watchers should have a better view of the PC market by late November, when Hewlett-Packard and Dell will report their latest quarterly results.

"Sales are running well ahead of the worst-case scenarios projected early in the year, and we are optimistic that total sales for 2009 will be better than our midyear forecast," Scalise said.