December Chip Sales Flat; SIA Forecasts Growth In 2004

The three-month average of worldwide chip sales fell by 0.5 percent to $16.03 billion in December from $16.12 billion last November, the Semiconductor Industry Association reported Monday (Feb. 2).

Consumer electronics provided a boost in December with chips for flat screen TVs, DVD players. Other markets took a rest from large increases recorded in previous months, according to analysts.

SIA predicted that 2004 chip market would grow by more than 19 percent.

Its Global Sales Report numbers inlcude a three-month rolling average of the monthly sales activity. The SIA compiles three-month moving averages of monthly sales activity to smooth variations due to industry sales reporting calendars, which often make March, June, September and December five-week months, thereby inflating numbers for those months.

Despite the flat December, the market was up 28 percent compared with December 2002. Chip makers recorded an 11 percent fourth quarter sequential gain and the 2003 sales were up to $166.4 billion in 2003, up 18.3 percent from the $140.8 billion in 2002.The industry's second-half 2003 performance was one of the strongest on record, supported by U.S. GDP growth of 8.2 percent in the third quarter and 4 percent in the fourth quarter, SIA said.

"The industry's broad, upward momentum across all product sectors and geographic markets is driving us toward another year of strong, double-digit growth, which is now expected to exceed 19 percent in 2004," said SIA President George Scalise. "The wireless sector continues to spearhead growth, but PC shipments also recovered in 2003 to an 11 percent unit volume increase. We are experiencing a virtual revolution in global consumer markets as consumers adopt new technology and multifunctional smart devices such as camera phones, PDAs and DVDs."

PC sales were a major contributor to growth in the fourth quarter, with DRAM revenue up 10.6 percent and microprocessors up 7.9 percent in the December quarter over the September quarter, the SIA said.

The global wireless market grew 16 percent in 2003, double initial forecasts. In 2003's final quarter, year-over-year volumes were up 20 percent with DSP sales rising 11.6 percent in the quarter and flash memory up a hefty 29.3 percent.

The wireline communications market turned in a positive performance in 2003's final quarter for the first time since 2000, with programmable logic device sales up 32.5 percent.As a result of strong all-round sales growth capacity utilization exceeded 95 percent in the fourth quarter, according to the SIA.

All geographic markets recorded rising chip sales in the final quarter of 2004, with sales in Europe up 14.5 percent sequentially, Japan up 10.5 percent in the quarter, sales in the Americas up 10.2 percent and Asia Pacific revenue up 10 percent.