Semiconductor sales decline even as companies lower forecasts

The worldwide economic slowdown is leading to a sizable dip in semiconductor sales, according to a report released by an industry body.

Worldwide sales of semiconductors declined by 2.4 per cent in October to $22.5 billion compared to sales of $23.0 billion in October 2007, the Semiconductor Industry Association (SIA) reported today. October sales were 2.1 per cent lower than the $23.0 billion in September 2008.  Sales for the first ten months of 2008 were $216 billion, an increase of 2.6 per cent from the first ten months of 2007 when sales were $210 billion.

Falling prices for memory chips were behind much of the decline. Excluding memory, sales rose 3.8 per cent from a year ago. Sales of the specialized flash memory used in digital cameras, cell phones and music players fell 41 per cent in dollars, even as they rose 123 per cent in terms of memory capacity shipped, the SIA said. Sales of dynamic random-access memory chips used in computers were down 14 per cent from a year ago, though the capacity of the chips sold was up 73 per cent.

"The slowdown in worldwide semiconductor sales that became evident in September continued in October," said SIA President George Scalise. "The worldwide financial turmoil is expected to continue to impact demand for semiconductors as we enter 2009. For 2009 PC unit shipments are forecast to decline by 5 per cent and cell phone unit shipments are projected to be down by 9 per cent. PCs and cell phones account for approximately 60 per cent of total demand for semiconductors."

On Monday, Taiwan Semiconductor Manufacturing became the latest in the industry to downwardly revise its guidance. It lowered its outlook for fourth-quarter sales to a range of $63.0 billion Taiwan dollars ($1.88 billion) to $65.0 billion Taiwan dollars ($1.94 billion), compared with its previous forecast given at the end of October for sales of 69.0 billion Taiwan dollars ($2.06 billion) to $71.0 billion Taiwan dollars ($2.12 billion).

On Friday, one of Europe's largest semiconductor makers, STMicroelectronics, lowered its fourth-quarter guidance. The Geneva-based company now expects fourth-quarter sales in the range of $2.2 billion to $2.4 billion, compared with $2.7 billion, previously.

The SIA is the leading voice for the semiconductor industry and has represented US semiconductor companies since 1977. Collectively, the chip industry employs a domestic workforce of 216,000 people.

The SIA Global Sales Report (GSR) is a three-month moving average of sales activity. The GSR is tabulated by the World Semiconductor Trade Statistics (WSTS) organization, an independent, non-profit organization established by the global semiconductor industry to compile industry statistics. The moving average is a mathematical smoothing technique that mitigates variations due to differences in companies' financial calendars.