RPT-UPDATE 1-Chip sales rise in Feb, 2005 growth seen possible
Mon Apr 4, 2005 06:54 AM ET
By Lucas van Grinsven, European Technology Correspondent
AMSTERDAM, April 4 (Reuters) - Worldwide chip sales rose to $18.1 billion in February, 15.8 percent over the year-ago period, raising hopes that the semiconductor industry is set for modest growth in 2005, an industry association said on Monday.
Although sales slipped 2 percent below revised January revenues, and year-on-year growth was slower than the 18 percent recorded in January, revenues still were stronger than expected during the first two months of 2005, the United States-based Semiconductor Industry Association said.
"Flat sales in January (compared with December) followed by a modest sequential decline in February are actually encouraging signs given that these two months are normally slow periods for the industry. Despite record gasoline prices, retail sales have continued to grow," George Scalise, president of the association, said in a statement.
Consumer spending on electronic goods has become increasingly important to the chip industry, with around half of all semiconductors sold in 2004 used in products bought by individuals, rather than by corporations and small businesses.
"If the current trends continue, our forecast for flat industry sales for 2005 could prove to have been overly cautious," Scalise said, although the group did not provide a new outlook.
Last year the industry enjoyed 23 percent revenue growth to a record $218 billion as a result of booming demand for products such as cell phones, laptop computers and digital cameras, with most of that growth between March and October.
MODEST GROWTH ACHIEVABLE
For 2005, forecasts from market research companies and financial analysts range between a 6 percent revenue decline and a 9 percent sales increase.
Investment bank J.P. Morgan said its forecast for 3 percent growth looked achievable after the performance during the first two months.
"Chip inventories have been worked through, which is helping factory utilisation rates to go up. The pricing climate remains okay, and end demand is still healthy. It looks as if 3 percent growth can be achieved," said analyst Jeroen Bos in London.
Sales of personal computers and wireless handsets, which generate about half of all chip demand, increased in the first two months, albeit at a slower pace than last year's.
Revenues of microprocessors rose 11 percent year-on-year, sales of DRAM memory chips used mainly in computers were up 36 percent versus a year ago and application-specific circuits for wireless devices rose 53 percent.
Chip inventories at electronic goods makers, a big concern in the third and fourth quarter of 2004 that slowed demand, have been worked down, the association said. Chip and chip equipment makers have said the same in recent weeks.
Sales growth was strongest in the Asia Pacific region, where most of the world's electronics are being produced. Sales there rose 25 percent to $7.7 billion compared with February 2004.
Europe came in second with a 15 percent sales increase. Revenues in the Americas rose 9 percent and in Japan 7 percent. The U.S. association published the statistical data, which was compiled by the World Semiconductor Trade Statistics group including the world's biggest microchip makers. The monthly data are averaged over three months to smooth out some seasonal influences.
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