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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (36935)	5/3/2002 2:53:41 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 67790

Chip Sales Leap 7.2% As Users Refill Shelves, Memory Prices Rocket BY JAMES DETAR Friday, May 3, 2002 INVESTOR'S BUSINESS DAILY March chip sales surprised people in the industry. But for a change, the surprise was that the numbers were so good, not bad. The Semiconductor Industry Association said global chip sales hit $10.75 billion in March. That's up 7.2% from February and the biggest monthly percentage jump since April 1986, the SIA says. The trade group also says first-quarter sales grew 5.6% from the fourth quarter, a record percentage increase. -------------------------------------------------------------------------------- Image: Ups And Downs -------------------------------------------------------------------------------- "March was much stronger than we had expected," said SIA President George Scalise. "It was an exception" to the slow rebound firms had been seeing. Bear Stearns analyst Charles Boucher says the month surpassed the investment bank's projections. "We saw broad strength" from all chip sectors, he said. But people in the industry aren't dancing in the aisles. Boucher, for one, says he saw no jump in chip equipment sales, which would signal a recovery. The March numbers must be seen in perspective. The March tally is still down more than 25% from sales in March 2001. And 2001 saw the biggest annual percentage decline in global chip sales — 32% — since the SIA started keeping figures in the 1970s. The industry has a ways to go to get healthy, says Scalise. Sales of chips used in personal computers and consumer electronics devices have picked up, he says, but the communications market remains depressed. The SIA attributes the big March largely to a jump in prices of dynamic random access memory chips. DRAMs are the most popular memory chips. DRAM sales rose a record 82.4% from February, the SIA says. Memory prices fell so far last year that industry officials expected a jump. "DRAM prices were down 80% last year," Scalise said. "There had to be some rebound this year." Another factor is helping results. In the last 12 months, chipmakers' customers have slashed their inventories of unsold product. Total inventories for computer and consumer device makers have fallen to $5 billion to $6 billion from about $36 billion at the start of 2001, says VLSI Research of San Jose, Calif. "That $5 billion to $6 billion will only last about three months," said VLSI President Dan Hutcheson. As a result, chip orders are picking up. "They have to," Hutcheson said. Asia Pacific saw the highest first-quarter growth. The region, which includes China but excludes Japan, bought 11% more chips than it did in fourth-quarter 2001. Sales in Japan were flat, lagging the other regions. The big March, though, isn't sparking a new 2002 forecast by the industry's largest trade group. It's sticking with forecasts of 7% growth to about $149 billion. "We still think the recovery will be modest," Scalise said. The SIA projects high-single-digit sales growth for the second half of the year. Scalise says sales will be up year-to-year starting in the latter half of this year. 2001 chip sales totaled $139 billion, down from a record $204 billion in 2000.