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Trends point to monthly chip market in annual decline from June

Posted: 06 Jul 2005 ?? ?Print Version ?Bookmark and Share

Keywords:semiconductor? NAND flash memory? mp3 player?

Steadily declining annual growth rates for the actual semiconductor sales in the months of January through May, both globally and for the Asia-Pacific region, indicate that year-to-year growth will have evaporated in June and that the market could be in for a period of annual decline, according to statistics from the Semiconductor Industry Association (SIA).

This could put into jeopardy forecasts from some market forecasters that, following the working through of an inventory correction, the second-half of 2005 could show a resumption of strong growth and produce strong growth for the semiconductor market in 2005 compared with 2004 (see story).

With anecdotal evidence being presented of a 30 percent price collapse for NAND flash memory components hitting in June, brought about by an overbuild of solid-state MP3 players (see story), it would seem that June actual sales will struggle to beat $20.73 billion recorded against June 2004.

Actual semiconductor sales in all the geographic regions except Asia-Pacific were lower in May 2005 than the same month a year before. The Asia-Pacific region more than compensated for declining sales in the Americas, Europe and Japanese regions and as a result actual sales were up 0.5 percent on May 2004, according to SIA actual semiconductor sales.

Globally the actual semiconductor sales in May were $16.94 billionconsiderably lower than the $18.05 billion three-month average put out by the SIA on Saturday (July 2).

Asia-Pacific region is key

The SIA and other regional industry groups publicize sales statistics gathered by World Semiconductor Trade Statistics (WSTS) as the three-month moving averages of monthly sales activity, rather than the actual numbers. The SIA calculates averages to smooth out variations due to companies' sales reporting calendars, which often make March, June, September and December five-week months thereby inflating those month's numbers.

Further examination of the SIA/WSTS figures shows that in the first five months of 2005 the month's percentage growth versus the same month a year before has been 25.2 percent, 9.0 percent, 6.9 percent, 4.5 percent and 0.5 percent, for the months January through May respectively. The actual sales therefore show a trend of declining growth with an extrapolation showing that June 2005 actual sales will be below those achieved in June 2004.

For the Asia-Pacific region the month-by-month percentage growth versus the same month a year before has been 39.7 percent, 15.9 percent, 16.4 percent, 11.1 percent and 5.1 percent for January through May respectively. And as the Asia-Pacific region is now responsible for nearly half of global chip sales this downward trending growth is significant.

Actual worldwide semiconductor sales in the first five months of 2005 were $88.69 billion, up 8.6 percent on the $81.65 billion sold in the first five months of 2004. This takes into account a revision of April's actual sales which appear to have been reduced by $30 million from the numbers given in June.

On a regional basis all the regions except Asia-Pacific showed an annual decline in May. Japan's sales in May 2005 were $3.44 billion, 4.5 percent lower than the $3.60 billion posted in May 2004. The America's region scored $2.99 billion in May, down 1.3 percent on the same month a year before; Europe achieved sales of $2.87 billion, down 2.4 percent. The Asia-Pacific region's sales were $7.65 billion, up 5.1 percent on May 2004, although Asia Pacific growth has halved compared with 11.5 percent for April.

- Peter Clarke

EE Times





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