Chip record predicted

Global chip sales are on course to beat their record year of 2004, the Semiconductor Industry Association said on Monday.

The chip industry body reported that sales rose sharply in August to $18.6bn, up 3.2 per cent from the $18bn reported in July, and 1.7 per cent higher than the $18.3bn recorded in August 2004.

Year-to-date chip sales were $144.4bn, up by 5.8 per cent on the 2004 running total at this stage of $136.5bn. “Worldwide sales of semiconductors remain on pace to exceed the record sales of 2004,” George Scalise, SIA president, said.

“While there are lingering concerns about the effect of high energy prices and the impacts of hurricanes Katrina and Rita in the US, end markets for semiconductors continue to be very strong.”

Mr Scalise said PC unit sales were still running ahead of earlier forecasts, boosting sales of microprocessor and Dynamic Random Access Memory (D-Ram) chips. Flash memory sales had also risen sharply because of “robust sales” of cell phones and consumer electronics products such as MP3 players.

The Asia-Pacific region, where many chips are sourced, has been driving overall growth with August sales up 13 per cent on a year earlier.

Chip factories were also busier. The SIA said overall capacity utilisation increased rose from 85 to 89 per cent in the second quarter, with “fabs” that use more advanced technologies on smaller chip sizes reaching 95 per cent.

The SIA said it expected utilisation rates to increase further in the third quarter.

“With continued strong demand from end markets, supply and demand in balance, coupled with inventories under control, the outlook for semiconductor sales remains strong, consistent with our forecast for 6 per cent year-to-year growth,” Mr Scalise said.

However, he warned that the effects of the two hurricanes including the sharp rise in gasoline prices had yet to kick in to the sales figures in terms of their possible effect on US consumer confidence.