RealTime IT News

Semiconductor Sales Rebound Big in Q2

Worldwide sales of semiconductors jumped during the second quarter of 2009, soaring 17 percent from the previous quarter to $51.7 billion, according to the Semiconductor Industry Association (SIA).

It's still a 20-percent decline from the $64.7 billion reported in the second quarter of 2008, however, and so far, 2009 is down 25 percent from sales in the first half of 2008.

Still, the sector is closing the gap with each consecutive month, however slowly.

"The fourth-consecutive monthly increase in sales is one indicator the industry is returning to normal seasonal growth patterns," SIA President George Scalise said in a statement. "Inventories have been closely managed, encouraging us to believe that the sequential increase in quarterly sales represents a gradual recovery of demand."

Many vendors had been hurt by a fourth-quarter dead stop in consumer spending, so they had to hit the brakes on manufacturing new product while they waited for inventory to drain from the channel.

This has proven especially painful for the semiconductor manufacturing sector, as their fabs have sat idle for months.

In more recent months, activity has picked up thanks to a combination of inventory replenishment, thanks to existing stocks finally selling out, as well as preparing for the second half of the year.

SIA spokesman John Greenagel adds that the SIA believes most of the increase in sales can be attributed to increased activity -- vendors preparing new products to ship -- rather than inventory re-stocking.

"The most recent estimates of PC and cell phone sales have been quite a bit more optimistic than earlier forecasts, and this is undoubtedly a factor in the recent sequential increases we are seeing," Greenagel said in an e-mail to InternetNews.com. "It is probably a bit early for the normal build for the holiday season, so the next two sales reports (July and August) should be helpful in assessing how key demand drivers are doing."

Healthy economic growth in Asia is also helping chip sales, with sales in Japan jumping the most -- up 8.2 percent from Q1 to Q2. Asia/Pacific in general rose 2.8 percent. The U.S. grew 4.8 percent and Europe barely managed growth at 0.7 percent.

The overall picture is improving from earlier, dire forecasts, Scalise noted. "Consensus estimates for unit sales of PCs are now in the range of -5 percent to flat compared to 2008, whereas earlier forecasts were projecting year-on-year unit declines of 9 to 12 percent," he said.

Cell phone handset sales declines are now expected to be about seven to nine percent rather than down 15 percent as predicted earlier. PCs and cell phones combined account for almost 60 percent of worldwide semiconductor consumption, Scalise said.