Semiconductor Billings
Updated: 9/4/01 4:43 PM EST
Released:
9/4/2001
Coverage:
July 2001
Actual:
-6.1%
Next Release:
10/3/2001
Analysis by:
Wes Basel
First Take
Global chip sales fell 6.1% in July from the previous month, continuing a nine-month
downturn, albeit at the slowest rate since April. All four of the SIA’s regional groups
experienced declining sales, with the Americas market recording the largest fall, at
9.9%,
and the Asian market the smallest, at 3.4%.
The Numbers
Semiconductor sales fell in June by 6.1% -- the ninth consecutive falloff. The pace
of the downturn did moderate in all regions.
For the fifth month in the current cycle, sales were down on a year-over-year
basis, by 37.9%. The level of sales in July was the lowest since September 1998.
The Americas market had the most severe decline in July, but the other three
regions also registered sharp fall-offs.
Behind the Numbers
Both global and U.S. finished equipment inventories are coming more in balance with
demand, primarily due to a sharp reduction in production. Some improvement in chip
inventories was reported by the SIA, whose current prognosis sees the bottom
occurring
in September.
The nine-month downturn is driven by both a slowdown in U.S. IT demand growth and
weaker prices for more common chip types. Weak IT demand has spread to Europe
and
Asia, while Japan is in or near recession. Over the past three months markets in the
Americas and Asia, excluding Japan, have been the weakest. The steep slide in the
Asian
region was related to its reliance on memory chip manufacturing, which has
experienced
the largest deterioration in price trends. The slowdown in U.S. computer demand
growth
heavily impacts chip demand in Asia as well, since many PCs slated for the U.S. market
are assembled in Asia.
The preliminary release of shipments, inventories and orders for U.S. manufacturers
last
week showed continued weakness for computer equipment orders, but a rebound in
communications equipment. The decline in computer equipment can be explained by
price cuts, initiated in tandem with reduced components costs. There is little hope of a
sustained recovery in communications equipment, given the excess capacity present in
telecom services, and saturation in the cellular industry.
Semiconductor orders received by U.S. manufacturers fell sharply in July, and the
previously reported increase in June was revised to a small decline. This dampens the
hopeful tone of today’s SIA press release.
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