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Chip sales slide as recovery ‘stalls’

But industry still looking healthier than it was last year

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The chip industry's fifteen-month recovery "stalled" in February, the Semiconductor Industry Association (SIA) reported today.

"Geopolitical uncertainty" - what you and I call 'war' - is to blame, the SIA said.

The SIA's latest monthly figures show a 3.3 per cent decline in sales between February and January. Some $12.2 billion worth of chips were sold worldwide in January this year. In February, that figure fell to $11.8 billion.

January's sales were down on December 2002's figures, but the SIA was able to wrote that off as a seasonal decline. It can't say the same thing for February.

Still, the SIA may be taking a pessimistic view. January 2003's sales exceeded those recorded for January 2002 by 22 per cent, and February 2003's sales were 18 per cent up on February 2002.

As the SIA itself says: "On a unit volume basis, year-over-year chip sales have continued to rise by double digits for the past ten months, with an average of 25 per cent per month from July 2002 through February 2003. Year-over-year revenue comparisons also remain favorable, as the industry has climbed out of the downturn, with an average 18-20 per cent gain over the seven months through February 2003.

"Year-over-year sales in February rose 17 per cent in Europe, 35 per cent in Japan and 26 per cent in the Asia Pacific market," the SIA said. Sales in the Americas were down 4.5 per cent, thanks to the continued outsourcing of electronic equipment production and component purchases to Asia, particularly China.

"Total electronic equipment production in China is forecast to double in four years, from $130 billion in 2002 to $252 billion in 2006, while component purchases by contract manufacturers in China are forecast to triple, rising from $35 billion to $100 billion over the 2002 to 2006 period," the SIA said.

And the SIA continues to predict double-digit growth for the year as a whole, propelled by strengthening demand in the latter half of the 2003. ®

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