Semi sales continue to feel brunt of DRAM price attrition, SIA says
The industry association reminded that the sequential sales decline is in line with normal seasonal patterns for the industry.
By Ann Steffora Mutschler, Senior Editor -- EDN, March 31, 2008
Worldwide sales of semiconductors in February were $20.44 billion, up a modest 1.5% from February 2007 sales of $20.14 billion, but down 4.9% from $21.48 billion in January, according to the Semiconductor Industry Association (SIA).
SIA reminded that the sequential sales decline is in line with normal seasonal patterns for the industry.
“Continued price attrition in DRAMs masked underlying strength in global chip sales in February,” George Scalise, president of the SIA, said in a statement today.
If memory products are excluded, worldwide semiconductor sales grew by almost 10% year-on-year, while DRAM revenues declined by more than 40% year-on-year despite a 43% increase in unit shipments.
Also, average selling prices (ASP) for DRAMs declined by nearly 60% year-on-year, as total unit shipments for all semiconductor products increased by 11.6% year-on-year, indicating strength in the end markets that drive demand for microchips, Scalise noted.
“Despite a slowing U.S. economy, markets outside the US continued to show robust growth in demand for electronic products that drive semiconductor sales,” he continued.
Citing reports from JPMorgan and Gartner showing strong sales of personal computers and handsets in international markets, Scalise also remarked, “The Asia-Pacific region, which includes China, has overtaken the US as the largest market for PCs. The Rest-of-the-World, which includes Eastern Europe, Africa and South America, equaled the number of units sold in the US in 2007 and is poised to surpass the US market in PC unit sales this year.”
Growth in international markets is even more dramatic when it comes to handset sales, especially in the Asia-Pacific region. According to JPMorgan, unit shipments of handsets in the Asia-Pacific region will reach almost 540 million units in 2008, which is more than three times more than the 161.6 million units expect to be sold in the US.
“High energy prices and turmoil in the US housing market undoubtedly have reduced the discretionary spending of American consumers. While any decline in US consumer spending has an effect on offshore electronics manufacturers, the rapid growth of sales of consumer electronics in other markets is continuing to create opportunities for semiconductor manufacturers,” Scalise added.
Semiconductor analysts at financial services firm Lehman Brothers said the February sales are actually weaker compared to seasonal trends, despite the SIA’s statement to the contrary, as the total semiconductor month-over-month revenue was down 2.3% versus the 10-year average of up 3%, with unit shipments weaker while ASPs were better than the prior month. Discretes, MCU, analog, logic, DRAM, microprocessors, and DSP results were all down versus seasonal trends, Lehman said.
“Near term, while we acknowledge visibility in the quarter has been limited with macro uncertainty affecting sentiment, we see March data key for back end loaded quarter. On average, during the past 10 years, March has accounted for around 39% of Q1 semi revenues and around 45% of Q1 microprocessor revenues,” Lehman’s Timothy Luke wrote in a report regarding the SIA’s results.
“Looking forward, in general, we retain a selective approach to names in our universe, with select opportunities as we look further into [the first half of the year] given intriguing valuations and modest inventory levels. We favor names such as [Qualcomm] and [Intel] and are positive on the analog sector including [Analog Devices], [Intersil] and [Fairchild Semiconductor]," Luke concluded.
