More supplyside lowering demand and excess capacity news :
Posted: 3:00 p.m., EDT, 9/10/98
Semiconductor sales continue to drop
By Margaret Quan
SAN JOSE, Calif. - The world's semiconductor market registered its eighth
straight month of declining sales in July, with chip sales falling 1.9 percent to
$9.66 billion, according to the Semiconductor Industry Association. Japan's
economic recession and continued pricing pressure were responsible for the
decline, the SIA said.
July's worldwide sales of $9.66 billion were down 1.9 percent from June and
down 17 percent from July '97. Sales in Japan of $2.05 billion dropped 30.2
percent from July '97, with two-thirds of the decline due to the depreciation of
the yen, the SIA said. An oversupply of memory chips continues to soften
pricing and trim revenues, the SIA said.
Despite the bad news, SIA president George Scalise said there are "positive
signs" on the horizon, with PC sales continuing to grow.
Semiconductor analysts said they expect a seasonal upturn in the market over
the next couple of months due to an increase in PC and consumer electronics
purchases driven by back-to-school and holiday buying.
In the Americas market, chip sales fell from $3.85 billion in June to $3.20 billion
in July. In Europe sales dropped from $2.31 billion in June to $2.22 billion in
July, and in the Asia-Pacific region sales dropped from $2.54 billion in June to
$2.1 billion in July.
In June, the SIA revised downward its forecast for 1998 chip sales after seeing
an across-the-board drop in sales in the first quarter. The SIA now expects a
1.8 percent decline in sales for the year, to $134.6 billion.
Sales figures for August and September may show some improvement,
according to Dan Scovel of Fahnestock & Co. (New York). Chip suppliers to
the PC industry have reported an increase in August activity after PC makers
worked through their excess inventories, he said.
Scovel also cited indications of small increases in DRAM pricing in recent weeks. "The DRAM market isn't yet close to good, but prices in the spot market for DRAMs have increased slightly," he said. "We think it's due to the cutbacks by the Koreans, who are shutting plants down for a few days each month. Still, the bad news is none of that capacity is going off-line, and there is still a fair amount of risk in the market." |
