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Chip market saw slower growth in June

Posted: 03 Aug 2006 ?? ?Print Version ?Bookmark and Share

Keywords:Terra Securities? World Semiconductor Trade Statistics? XX? XX? XX?

Monthly chip sales are expected to have deteriorated to a three-month average of $19.4 billion in June from $19.7 billion in May, according to Bruce Diesen, an analyst with Terra Securities ASA. The reason is a PC slow down that is likely to get worse in the next quarter, the analyst said.

Official figures from World Semiconductor Trade Statistics are (WSTS) scheduled to be released by the U.S. Semiconductor Industry Association in the next few days.

"We see unadjusted sales at $22.16 billion, up 9.7 percent year over year, a slightly slower growth rate than in May," said Diesen.

The SIA's Global Sales Report is tabulated by WSTS as a moving three-month average to reduce the swings due to reporting effects from different companies.

It have been estimated by market researcher iSuppli Corp. recently that Intel is facing a large inventory overhang for its processors and chipsets due to a slowdown in the PC industry. In terms of the general trend Diesen agreed.

"Although we think PC production actually improved in June, we expect some slippage in PC chips. We expect strong sales of handset chips in June," he said. However, Terra estimates that world chip market will rise only 5 percent this year, compared with 2005. This is at the far low end of a consensus that has built up around 10 percent for the market's annual growth. "Our June forecast implies sales growth of 8.2 percent in Q2, but we see the growth rate moderating to less than 6 percent in Q3 due to the PC slowdown," added Diesen.

- Peter Clarke

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