Worldwide chip sales fall by 42 percent

Worldwide sales of semiconductors fell by nearly half over the course of the last year, according to a report released Monday by the Semiconductor Industry Association (SIA).

Chip sales plummeted 42 percent to US$10.49 billion in August, down from $18.08 billion at the same time last year, the report said. Month-to-month, August sales were off 3.4 percent from July 2001, an improvement from the 6.1 percent decline experienced in the previous month.

Compared to August 2000, the Japanese chip market declined 36.3 percent, the Asia Pacific market slid 31.7 percent, the European market experienced a 40 percent decline in chip sales, and the U.S. market was hit the hardest, suffering a 55.3 percent drop in chip sales, the report said.

"The reduced sales level continues to reflect the slow economic activity in the world's major economies combined with excess inventories in the information technology market," said George Scalise, president of the SIA, in a statement.

Although Scalise said the September 11 terrorist attacks could "slightly dampen" chip sales for September 2001, he predicts that the correction in high chip inventories throughout the technology supply chain will be completed by that month. He expects sequential quarterly growth to begin in December.

"We expect that traditional holiday sales of personal computers, communication products, and a variety of handheld devices will accelerate year-end demand for a broad range of semiconductors," he said.

The chip industry has experienced four-year growth cycles since the late 1950s, the report explained. During that time the worldwide semiconductor industry has grown at a compound annual growth rate of 17 percent.

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