Visibility remains limited, but April semiconductor sales better than expected, SIA reports

SIA President George Scalise says the 6.4% sequential increase in April sales was driven by moderate improvements in a number of end-demand drivers and inventory replenishment.

By Suzanne Deffree, Managing Editor, News -- Electronic News, 6/1/2009

Worldwide sales of semiconductors were up more than expected in April, when they climbed 6.4% from March to $15.6 billion, according to a report today from the SIA (Semiconductor Industry Association).

Also see: Gartner expectations for 2009 improve, predicts Q2 sales growth   Bottom hit in Q1, 5% growth for Q2 expected, IC Insights reports

While April sales were still 25% lower than the $20.9 billion in sales reached in April 2008, the report is a welcomed one and the third somewhat optimistic statement from an industry watcher in less than a week after Gartner and IC Insights said they each expected Q2 sales growth.

“The better-than-expected 6.4% sequential increase in April sales was driven by moderate improvements in a number of end-demand drivers and inventory replenishment,” said SIA President George Scalise in a statement this morning. “The PC market – a major consumer of semiconductors – has been stronger than predicted earlier in the year. Consensus forecasts currently project that PC unit sales in 2009 will decline by about 6% compared to earlier forecasts of a decline in the range of 12%.

"Analysts are also more optimistic about cell phone unit sales, which are now projected to decline by around 7% compared to earlier forecasts of 15%," Scalise continued. "PCs and cell phones account for nearly 60% of all semiconductor consumption."

Still, the semiconductor industry is not without weak spots. SIA noted that the worldwide automotive market, which accounts for about 7% of total semiconductor sales, continues to be down and that corporate IT (information technology) spending has also lagged normal replacement patterns.

Meanwhile, SIA described the consumer electronics sector as a mixed picture, noting that analysts are estimating increased unit sales of digital TVs and hand-held game players, but lower unit sales of most other consumer electronics products.

“Visibility remains limited,” Scalise said. “Two consecutive months of sequential sales growth may be an indication of a return to more normal seasonal sales patterns in some market sectors, albeit at lower sales levels than last year."

Indeed, the SIA in May reported that March sales showed a month-over-month increase of 3.3%. At that time, Scalise also noted limited visibility and said that the modest sequential rebound in worldwide sales in March suggests that demand had stabilized somewhat.