World semiconductor sales rise 2.8% in May

SAN JOSE: Worldwide sales of semiconductors grew 2.8 per cent in May from

April, as chips used in mobile telephones and consumer electronics offset a

slump in computer chips, according to an industry trade group.

The US-based Semiconductor Industry Association (SIA) said worldwide sales

grew to $11.37 billion compared to the $11.07 billion in April. Sales figures

showed broad-based growth except for computer chips, it said.

However, these near-term comparisons tell only part of the story. May sales

actually fell 10.5 per cent from year-ago levels of $12.71 billion. The cyclical

semiconductor industry has only begun to emerge from two years of slumping

sales.

Geographically, only sales in the Asia-Pacific region rose year-over-year --

climbing 22.4 per cent in May 2002 from the prior May. Sales in the Americas,

Europe and Japan declined by more than 20 per cent in each region, the SIA

figures showed.

"While the computation sector is down, all other sectors including

wireless and consumer continue to thrive," SIA President George Scalise

said in a statement. "This increase drove the sales of such products as

flash, digital signal processors, application specific products and

analog."

Digital signal processors that form the heart of mobile phones are made by

Texas Instruments and Analog Devices Inc. Flash memory producers include Atmel

Corp., SanDisk Corp., STMicroelectronics NV, among others.

Analog chips are made by a vast number of companies, including National

Semiconductor and Philips Electronics. Custom, or application-specific, chips

are made by IBM, Taiwan Semiconductor and United Microelectronics.

Companies at the heart of the computer industry food chain have signaled a

slump in second-quarter sales of their products. Computer microprocessor makers

like Intel Corp. and Advanced Micro Devices, and memory chip suppliers such as

Micron Technology Inc. have warned in recent months of softer-than-expected

demand for such chips.

Geographically, results were mixed, month-to-month. European chip makers lost

ground, with sales declining 2.0 per cent in May versus April. Japanese sales

role 5.7 per cent month over month, while the Americas grew 1.3 per cent in May

compared with April.

The migration of semiconductor customers to contract manufacturing continues

with the Asia/Pacific market, especially China, the beneficiary, the SIA said.

In May, sales to Asia/Pacific increased 4.8 per cent from April and now

represent 37 per cent of the worldwide market.

Many electronic devices are now built in the region stretching from Korea to

Singapore, then shipped to other markets in the Americas and Europe. Last month,

the SIA released its mid-year market forecast, which asserted that an

industry-wide recovery is currently under way.

It expects semiconductor sales to increase by 3.1 per cent in 2002 with gains

of about 9 per cent in both the third and fourth quarters predicted. The growth

rate is then expected to accelerate to 23.2 per cent in 2003 and 20.9 per cent

in 2004.

(C) Reuters Limited.