IT Spending Keeps Chip Sales Blooming

For the second month in a row, semiconductor manufacturers saw
double-digit sales fueled by a resurgence in corporate spending, according
to a report published Monday.

In its monthly update, the Semiconductor
Industry Association (SIA)
said worldwide chip sales rise to $16.28
billion in March. That is a 4.4 percent gain from the $15.58 billion
reported in February and a 32.3 percent increase from March of 2003.

figures for February 2004 were also above 30 percent, making it the second
month in a row that 2004 has replaced the hardships of the previous year.

IT spending on software and hardware continued to be one of the leading
drivers of sales growth. The report showed an increase of 11.5 percent in
the first quarter, the fourth successive quarter of strong growth and the
third straight quarter of double-digit growth.

“The good news for us in the microprocessor industry is that there is almost
no excess inventory,” SIA analyst Doug Andrey said during a conference call
with reporters. “It turned out that PC shipments are making their biggest
impact now as they make up 30 percent of sales in the semiconductor

The increase in sales has prompted the San Jose, Calif.-based trade group
to revise its estimates for the year.

“Based on the strong first-quarter results, it now appears likely that
growth for 2004 will exceed 20 percent,” SIA president George Scalise said
in a statement. “The fundamentals are in place for continued robust growth
in chip sales through the end of the year.”

Preliminary estimates for
year-end growth previously sat at 19.4 percent.

One of the biggest growth spurts was found in ASSPs (application-specific standard
products) for automotive applications, which grew 8.4 percent in March.
Other hot sellers included microprocessors and DRAMs. These circuits, which are primarily
used in personal computers, showed growth in March of 5.3 percent and 5.9
percent, respectively.

March sales of programmable logic devices, which are
widely used in networking and telecommunications applications, were also up
12.9 percent from February.

The report also showed sales were up in all parts of the globe in March.
Europe reported the strongest month-over-month sales at 6.2 percent, while
the Asian Pacific markets — excluding Japan — recorded the best year-over-year
numbers with 45.8 percent in sales.

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

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