Chip sales continue slow path upward as economic slide halts

The semiconductor industry continued its slow path to recovery as it reported that April sales were up 6.4 percent to $15.6 billion compared to March.

Chip makers are a bellwether industry, since their goods are used in all things electronic. After plummeting for a few months during the economic meltdown, chip sales were up 3 percent month-to-month in March and rose again in April, according to the Semiconductor Industry Association (SIA).

Still, the industry is far from healthy. April sales were 25 percent lower than the $20.9 billion reported in April 2008, based on the group’s three-month moving average of chip sales.

George Scalise, president of the SIA, said the April sales increase over March was better than expected and was driven by moderate improvements in end markets and inventory replenishment. Computer and cell phone makers had cut back on orders so severely that they ran low on inventories and had to start buying again. Intel chief executive Paul Otellini has said the computer industry had hit bottom in the first quarter.

Overall, analysts believe that PC unit sales will decline 6 percent in 2009, compared to earlier forecasts of a 12 percent decline. Cell phone sales are expected to fall about 7 percent, compared to earlier forecasts of 15 percent. Both categories are 60 percent of chip purchases.

The car chip market, which is 7 percent of all sales, remains weak. And corporate information technology buyers have slowed their PC replacements. While consumer electronics has seen an increase in the purchase of digital TVs and handheld game players, other categories are slipping.

Scalise said visibility is still limited.

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