January chip sales declined 28%, visibility improving, SIA reports

"Inventory levels are very low and there are some signs that forward visibility is improving," SIA President George Scalise said while reporting worldwide sales of semiconductors reached $15.3 billion in January.

By Suzanne Deffree, Managing Editor, News -- Electronic News, 3/2/2009

While the semiconductor industry continues to be affected by the global economic slowdown, the SIA (Semiconductor Industry Association) reported today that there are some signs that the fog shrouding sales visibility is beginning to dissipate.

Worldwide sales of semiconductors were $15.3 billion in January, a decline of 28.6% compared to January 2008 sales of $21.5 billion and a decline of 11.9% from December 2008 when sales were $17.4 billion, according to SIA data (see chart below).

“Worldwide semiconductor sales in January, historically a relatively weak month for the industry, reflected a continuing erosion of consumer confidence and the effects of the global economic recession,” SIA President George Scalise (pictured) said in a statement today. “Sales declined across the entire range of semiconductor products, as sales of important demand drivers such as personal computers, cell phones, automobiles and consumer items remained under pressure."

Scalise made those same points last month when the SIA reported on full-year 2008, which marked the first year-on-year drop in sales since 2001, according to the group's data.

“Inventory levels are very low and there are some signs that forward visibility is improving,” Scalise concluded. 

Scalise is not alone in seeing improving visibility. Indeed, Intel CEO Paul Otellini last week said at a Goldman Sachs conference that the company believes the semiconductor market is becoming more predictable as PC OEMs and retailers adjust to lower demand, according to reports. Intel, like many other companies in the semiconductor industry, did not give a formal Q1 guidance when reporting on its Q4 2008 financial results in mid January, citing poor visibility at the time.

SIA also made note of the Economic Recovery Act recently passed by the Congress and signed by President Obama and similar measures adopted in other countries as having the potential to drive future demand for semiconductors while addressing important issues such as energy, health care, and infrastructure improvements. The SIA applauded the act when it was first signed in February.