Chip Sales Show Staying Power in 2004

Worldwide sales of semiconductors continued their strong 2004 performance in May with purchases reaching $17.32 billion, according to a report released today. The numbers reflect a 2.1 percent increase over April and a 36.6 percent jump over May 2003 sales.

The monthly data published by the Semiconductor Industry Association (SIA) shows sales were up in all regions in May except Europe, with the strongest growth coming from the Asia-Pacific region, which rose by 4.5 percent.

Japan was next with a 2 percent increase in monthly sales, followed by the Americas at 0.2 percent. European sales fell from April levels by 1.2 percent.

The Asia Pacific performance continues the strong trend for Chinese and
Korean chip makers, who are 54 percent ahead of last May’s semiconductor
sales. Europe is a distant second in year-over-year performance at 29.1
percent, followed by the Americas (26.5 percent) and Japan (25.1 percent).

“At $17.32 billion, global semiconductor sales reached their highest level
since December of 2000, reflecting continued healthy economic growth,
especially in the United States and China,” SIA President George Scalise
said in a statement. “The industry fundamentals continue to look good,
leading us to expect strong growth through the remainder of 2004.”

The SIA report said overall factory utilization continues to increase,
rising from 92 percent in the fourth quarter of 2003 to 94 percent in the
first quarter of 2004. For leading-edge manufacturers (defined as facilities
capable of producing geometries of 0.16-micron and smaller), capacity
utilization rates are currently at 99 percent.

“Customers appear to be managing inventories prudently even in the face of
supply-demand constraints,” Scalise said.

While most product segments continued to reflect seasonal strength, the SIA
said demand for microchips used in wireless communications — digital signal
processors, optoelectronics devices, and application-specific standard
products — was especially strong, reflecting strong sales of cellular
phones with enhanced display, imaging, and data capabilities.

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