Weak PC demand weighs on chip sales
By Tom Foremski in San Francisco
Published: May 31 2002 19:02 | Last Updated: May 31 2002 19:02
Financial Times
Worldwide chip sales continued to decline in April compared with last year's levels on weak demand for PCs and other electronic products.
Sales were down 8 per cent in April compared with the same period last year, but rose 3 per cent sequentially from March.
The Semiconductor Industry Association (SIA) monthly Global Sales Report released on Friday caused some concern on Wall Street because there were few signs of improving demand in computers, communications and other products.
Dan Niles, an analyst at Lehman Brothers, said the year-over -year decline was larger than his estimate of a 2 per cent drop. He also pointed to a larger-than-expected decline in microprocessor sales, which could impact Intel, the world's largest chipmaker. Intel will provide a mid-quarter update on Thursday.
With the drop in April microprocessor sales, and Lehman's belief that May PC sales were disappointing, the Intel update "is especially interesting," said Mr Niles.
George Scalise, president of SIA, said the April sales data were a further sign of a rebounding market. "We expect the modest growth we are experiencing in the first half of the year to continue throughout the remainder of 2002."
The semiconductor industry suffered a record 32 per cent decline in 2001 as PC, communications and consumer electronics sales plunged. Large customer chip inventory levels have been reduced but end-user demand continues to be moderate as the sector moves into the traditionally weak summer period.
There were some encouraging signs in the SIA figures. Mr Scalise said the sequential growth in sales was led by chips for wireless communications products. Businesses and homes are increasingly installing wireless communications networks to link computers without expensive cabling.
Semiconductor companies staged a modest rally on Friday as part of a broad rise in markets. The Philadelphia Stock Index, a basket of leading chip and chip equipment makers, was up 2 per cent to 488.06 in Friday mid-day trading. It reversed eight consecutive days of declines during which it lost 12 per cent.
Although many chipmakers raised their guidance for the second quarter, Wall Street is concerned about the usually slow summer season and its effect on semiconductor companies. Large chip customers, such as Hewlett-Packard, Dell, Cisco and Nokia, would have to report reasonably good demand to help the sector. The World Semiconductor Trade Statistics trade group on Monday forecast a 2.3 per cent rise in chip sales this year. |
