Chips Are Down, But Group Predicts Rebound

Sales of semiconductors worldwide fell 42 percent in August, and September may be even bleaker, but an industry group sees a rebound in sales by the end of next year.

Sales of semiconductors worldwide in August fell 42 percent from a year ago, and while the numbers for September may be even bleaker, an industry group is predicting that sales will rebound before the end 2002.

Overall, international sales totaled $10.49 billion in August, down from $18.08 billion a year ago, resulting in a decline of 3.4 percent from the previous month, according to a report released this week by the Semiconductor Industry Association.

"The reduced sales level continues to reflect the slow economic activity in the worlds major economies combined with excess inventories in the information technology market," said George Scalise, SIA president.

While the group expects last months terrorist attacks in New York and Washington—and the resulting economic worries that followed—will further undermine sales, Scalise said he is confident companies will have used up their excess inventories of chips by years end. That will be followed by a new wave of buying that will fuel a rebound in sales, he said.

"The tragic events of Sept. 11 may slightly dampen sales for the month of September due to short-term logistical issues," he said. "However, we are still confident that we will see sequential quarterly growth commencing in the December quarter. We expect that traditional holiday sales of personal computers, communications products and a variety of handheld devices will accelerate year-end demand for a broad range of semiconductors."

Chip sales declined in all global regions, according to the trade groups report. The Americas posted the steepest drop, falling 55.3 percent from a year ago. Elsewhere, Europe was down 40 percent, Japan fell 36.3 percent, and the Asia Pacific region declined 31.7 percent.

Data collected by SIA, based in San Jose, Calif., is based on monthly surveys of more than 60 chip makers. Overall, the groups member companies comprise 90 percent of U.S.-based semiconductor production.