Chip Sales Lukewarm for Romantics

Semiconductor trade groups saw a slight, but notable February increase in sales driven by a rebound in corporate information technology spending, according to a report issued Friday.

The survey issued by the Semiconductor Industry Association (SIA) said worldwide sales of semiconductors in February rose 30.8 percent compared to February 2003. However, the most romantic month was cruel, to be kind, as total sales of $15.58 billion reflected only a modest 0.2 percent increase from January 2004.

The modest increase is still encouraging considering February historically has been a relatively weak month for chip sales.

“While growth was largely driven by a rebound in corporate information technology spending, the current growth cycle extends to all end markets and major product areas,” SIA president George Scalise said in a statement.

The San Jose, Calif.-based trade group said sales of programmable logic devices and standard cells grew in February by 4.3 percent, driven by a recovery in the wireline communications market. Microprocessor sales declined by 0.7 percent, reflecting historic patterns of subdued PC sales in the month.

“The strong year-on-year growth of more than 30 percent reflects the steady improvement in business conditions, a trend which we expect will continue throughout 2004,” Scalise said. “We are encouraged by the recovery in demand in the wireline communications sector. Customers remain cautious about inventories, and February shipments actually trailed semiconductor consumption. As a result, we do not expect inventory corrections will be a drag on chip sales going forward.”

Regionally, the SIA said sales in the United States and Japan dipped slightly, while all other geographic regions recorded increases. The wireless communications sector and consumer electronics, which propelled the growth cycle with strong, double-digit increases through year-end, were also flat to down in the month, but are expected to exhibit renewed momentum as the year progresses.

The SIA’s report is based on a three-year moving average of sales activity. The numbers are tabulated by the World Semiconductor Trade Statistics (WSTS) organization, which represents approximately 66 semiconductor companies.