BT, Published November 1, 2005
Global chip sales soar ahead of shopping season

Revenues up 5.6% to US$19.6b in Sept as firms bet on the digital consumer

(AMSTERDAM) Global sales of semiconductors haven risen strongly ahead of the end-of-year shopping season, driven by booming demand for cellphones, computers and electronic gadgets for the living room, a survey said yesterday. Global revenues, averaged out over three months to smoothen monthly events, climbed 5.6 per cent to US$19.6 billion in September from a year earlier. Revenues were up 5.2 per cent from August, according to the World Semiconductor Trade Statistics (WSTS) association.

'The market drivers were personal computers, the communication segment with mobile phones, and digital consumer, as Christmas this year will be dominated by digital devices such as MP3 players, digital TV and DVD recorders,' said Patrice Vaslot, vice-chairman for Europe at the WSTS. The association groups companies representing 85 per cent of the world's chip market.

Analysts from investment bank JP Morgan said September chip revenues had come in ahead of the normal seasonal increase after the summer, putting the industry on track for at least 8 per cent sales growth in 2005 from the record year of 2004, when revenues jumped 28 per cent to US$213 billion. 'If we have normal seasonality from this point, it would result in close to 9 per cent revenue growth,' analysts Uche Orji and Jeroen Bos in London said.

Higher revenues would be mostly driven by higher unit growth - more chips sold - and a modest 2 per cent increase in prices. Up to September, the global chip market has grown 6.1 per cent this year, the WSTS numbers showed. Last week, the WSTS forecast 6.6 per cent revenue growth this year.

Both the semiconductor industry and analysts point out that the chips sold in September have been ordered on anticipated, and not yet realised, demand around Thanksgiving and Christmas for flat TVs, hard disk recorders and the latest mobile phones. 'This indicates that manufacturers of devices expect a strong end of the year. Let's hope they are right. The digital consumer is really expected to be the main pillar of Christmas this year,' Mr Vaslot said.

Earlier last month two of the world's largest microprocessor chipmakers - Intel Corp and Advanced Micro Devices - forecast good times ahead for the semicon sector as they reported healthy third quarter revenues. Intel said it expects revenues of between US$10.2 billion and US$10.8 billion this quarter, slightly lower than analysts' estimates. And AMD projected its chip sales to grow by 7 to 13 per cent this quarter over the third quarter and by 42 to 50 per cent from a year ago.

Last week Taiwan Semiconductor, the world's largest supplier of made-to-order chips, said it expects sales in the fourth quarter to be in the range of NT$77 billion (S$3.8 billion) to NT$79 billion, compared with NT$63.9 billion a year ago. - Reuters, Bloomberg