Semiconductor Sales Down

SIA reports show decline of 42 percent, predict rebound by end of next year.

Global sales of semiconductors continued to spiral downward as the summer drew to a close, but an industry group is predicting that sales will rebound before the end of next year.

Worldwide sales of semiconductors in August fell 42 percent from the same period a year ago, and the numbers for last month may be even bleaker, said the Semiconductor Industry Association in a report issued last week.

Overall, international sales totaled $10.49 billion in August, down from $18.08 billion for the same period a year ago, resulting in a decline of 3.4 percent from the previous month, according to the report.

SIA President George Scalise said the drop in sales reflects the economic slowdown in major countries as well as excess inventories in the high-tech market. Those economic pressures will be heightened by fallout from last months terrorist attacks in New York and Washington and the resulting impact on the global financial picture, the report said. That will further undermine sales, Scalise said.

In the United States, slower chip sales mirror the overall weakening economy, which has led businesses to rein in costs.

"Weve adjusted our spending downward," said Phil Senff, director of Internet services for iBiz Technology Corp., in Phoenix.

Senff said iBiz has taken "a more conservative approach to spending" in recent months. iBiz makes custom Intel Corp.-based servers, manages Web hosting and co-location server facilities, and makes handheld accessories.

Despite the economic troubles, the SIA said it is optimistic that sales will rebound by the end of next year.

The attacks, the group said, will have a short-term impact on last months sales, due in large part to logistical issues brought about by the halt in most cross-country and international transportation immediately after the passenger jets crashed into the World Trade Center towers and the Pentagon.

However, the association said that sales should trend upward by years end, fueled by the traditional holiday sales of PCs, communications products and handheld devices.

The sales will accelerate year-end demand for semiconductors, which in turn will enable companies strapped by huge inventory costs to clear out those warehouses and make way for new chips, the SIA said. That will be followed by a new wave of buying that will fuel a rebound in sales, according to the SIA, based in San Jose, Calif.

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.