Demand for Chips Still Slowing Jun 2, 2003

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The semiconductor industry continued to struggle in April, with the latest sales figures released recently showing a further slowing in global demand. The poor sales data casts doubt on hopes of a significant recovery for the sector this year following 2 years of downturn. The Semiconductor Industry Association (SIA) global sales report for April recorded U.S. $12.1 billion in sales, unchanged from March 2003.

Although April sales were up 9.7 percent from a year ago the numbers were still disappointing, indicating a weakening trend following a strong start to the year. But the SIA believes that unusual circumstances were to blame and that chip orders will recover. "Sluggish global economic growth and the Chinese Sars outbreak caused a deferral of sales in April to future months," said George Scalise, president of the SIA. The global chip industry has been patiently waiting for a strong recovery following a record 32-percent drop in sales in 2001.

Last year sales barely budged, improving just 1.3 percent. And this year was supposed to be a boom year with the SIA predicting nearly 20-percent growth. However, weak demand in March resulted in the SIA cutting its forecast to 10- to 15-percent growth this year, with even that considered by many industry analysts to be an optimistic forecast. (Reuters)

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