Chips Sales Still Downbeat

The first quarter of 2009 wasn't much better than the remarkably bad 2008.

iSuppli has released its final sales figures for 2008 and the numbers are not pretty.

And then there's the Semiconductor Industry Association's (SIA) number for February, which are downright ugly.

The collapse began in the fourth quarter of 2008, with sales declining by 5.2 percent, with memory prices causing the bulk of the damage, according to iSuppli. iSuppli had been projecting a Q4 decline of just two percent as late as November 2008 but sales continued to plummet.

Memory makers took the biggest hits. Korean memory chip maker Hynix fell 33.4 percent in 2008, causing it to fall from sixth place in iSuppli's list of top semiconductor makers by revenue to ninth place.

"It’s not always good to be the king, as shown by the results of most of the top semiconductor suppliers in 2008," said Dale Ford, senior vice president of market intelligence services at iSuppli, in a statement.

Samsung, the world's top memory chip maker, fell 14.2 percent in 2008, while Sony's sales fell 13.7 percent last year. Intel, a semiconductor maker with no memory products since it divested its flash memory business, fell just 0.7 percent.

Ten of the top 25 suppliers managed to show growth in 2008, but four of them got that through acquisitions. Six achieved it through growth. All of them, iSuppli noted, were fabless. That means they had no fabrication facilities. Instead, they outsourced manufacture of the chips to other fabrication plants.

Qualcomm, NEC, Panasonic, Sharp, Marvell and Fujitsu expanded their revenues by anywhere between 1.5 percent and 15.3 percent in 2008 based only on organic growth, although iSuppli noted that for the four Japanese suppliers – NEC, Panasonic, Sharp and Fujitsu Microelectronics—that growth came from a more favorable exchange rate between the Japanese yen and the U.S. dollar.

A few glimmers of hope

Things were a whole lot worse in February, with chip sales down 30 percent from February 2008, according to the SIA numbers. That's on top of a 12 percent year-over-year drop in January.

The SIA called February's drop "one of the steepest corrections in the industry's history." Still, there were a few glimmers of hope. U.S. sales were off only 3.7 percent between January and February and off 6.9 percent in Europe and 6.4 percent in Asia. Only Japan was in really bad shape, down 13.7 percent month-to-month.

SIA President George Scalise said "it would be premature to conclude that the sales decline has hit bottom," although "there are some indications that the rate of decline has moderated from the final quarter of 2008" in a statement announcing the stats.

Scalise added that demand for semiconductors is likely to continue to be well below 2008 levels for the next few quarters, with a gradual recovery to follow as the global economy recovers, something other analysts have forecast as well.

This article was first published on InternetNews.com.




Tags: services, chips, Intel, economy, Qualcomm


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