A rose amongst a thicket of thorns?
Report: Indicators Confirm Chip Recovery
story.news.yahoo.com
Wed Mar 20, 1:57 PM ET
Lisa Gill, www.NewsFactor.com
In what could herald the start of a semiconductor recovery, one industry trade group on Tuesday said orders for chip equipment makers increased for the fourth month in a row.
According to data compiled by Semiconductor Equipment and Materials International (SEMI), February orders increased 10 percent to US$771.6 million, up from January's $645.2 million.
Chip equipment revenue increased 3 percent to $822 million from $800 million in January.
Timely Indicators
Russ Craig, semiconductor research director at the Aberdeen Group, told NewsFactor that the SEMI index is significant because it tracks fewer companies and compiles more timely information. Often, he said, data relating to the semiconductor industry is a quarter or more old.
Craig also said he believes the increase in sales among chip equipment makers -- which produce the devices that test and manufacture chips -- is a solid indicator of the future of the chip industry.
"It's a leading indicator that the people who really know, the ones who see the day-to-day orders, are feeling confident enough about what's happening that they are spending money on key pieces of equipment," he noted.
Considering that "the industry has been in one of the nastiest downturns it has ever seen," the SEMI index information "is a very good sign for the industry," Craig said.
SEMI president and CEO Stanley Myers also acknowledged in a statement that 2002 had been expected to be a tough year for the chip industry.
However, Myers said, "The picture has brightened with recent announcements by some chipmakers of possible upward revisions in capital spending and the incremental acceleration of bookings over the last three months."
Full Recovery? Not Yet
But according to Aberdeen's Craig, a full-on semiconductor recovery is not in the cards until the latter half of 2002 and early 2003. He also said the SEMI index numbers indicate that the industry will be on track for the rest of the year.
"These new products people are investing in capital equipment for today are not going to begin to hit volume production until late 2002," he noted.
Craig pointed to Intel's (Nasdaq: INTC - news) 802.11a wireless chip, which is slated to start shipping in mobile devices by the end of this year, though production is starting now.
"A lot of the 11a products will be announced the end of the first and second quarter of this year," he explained. "They will start sampling in Q3, and they'll hit volume production in the fourth quarter, and they're trying to get them out by the Christmas season. And from there they will ripple out in the enterprise market."
Feds Laud Chip Sales
Chip sales themselves also are aiding the economy.
Increased sales of semiconductor chips, in addition to capital and consumer goods and oil, were credited by the U.S. Department of Commerce Tuesday with causing a 3.6 percent increase in imports to $106.49 billion in January, helping to widen the January trade deficit slightly more than expected.
The Department of Commerce reported that the overall trade deficit in January was $28.52 billion, up from a revised $24.71 billion in December -- a larger increase than anticipated.
That increase in the trade deficit is seen by economists as an indicator of economic recovery.
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