Worldwide semiconductor chip sales fell 2.7 percent to $291.6 billion in 2012, down from the record sales of $299.5 billion in 2011, according to the Semiconductor Industry Association.

The industry trade association was upbeat about the number since it beat forecasts and could have been worse in the face of substantial macroeconomic weakness. The group says that near-term economic and policy uncertainty poses risks for the near-term market outlook. The numbers are a bellwether for the tech economy, since chips are the foundation of electronic devices.

As a region, the Americas showed strength, with sales increasing 13.4 percent in December compared to a year ago, and sales in the Americas were up 12 percent compared to the previous quarter. But for all of 2012, the Americas were down slightly. U.S. sales are more than $150 billion, and the U.S. employs about 250,000 people in the chip industry.

The 2012 sales were the third-highest ever, but fell shy of the long-term goal of hitting $300 billion in sales. Global sales in December were $24.7 billion, down 3 percent from the previous month. Fourth-quarter sales were $74.2 billion, up 3.8 percent from $71.5 billion a year earlier. All monthly sales numbers represent a three-month moving average (a technique to smooth anomalies).

“Despite substantial macroeconomic challenges, the global semiconductor industry outperformed forecasts and posted one of its highest yearly sales totals in 2012,” said Brian Toohey, president and chief executive of the Semiconductor Industry Association. “Recent momentum, led by strength in the Americas, has the industry well-positioned for a successful 2013.”

Some segments were strong. Logic, the largest category, was $81.7 billion in 2012, up 3.7 percent from the previous year. MOS microprocessors (such as the kind that Intel makes for the brains of a computer) were $60.2 billion, down from a year ago. Memory chip sales were $57 billion, also down from a year ago.

Optoelectronics was the fastest growing market on a yearly basis, increasing 13.4 percent in 2012 to reach $26.2 billion for the year. Those include mobile device applications and LED lighting chips that improve the energy efficiency of lighting. s. NAND flash memory chips — used in mobile devices, USB flash drives, memory cards and related products for the storage and transfer of data — grew at the second-fastest rate of 4.1 percent to reach $25.4 billion in 2012.

Sales in Asia-Pacific increased in December by 6.7 percent compared to a year ago, but Europe fell 5.5 percent and Japan decreased 11.2 percent. Total yearly sales in all four regions were lower in 2012 compared to 2011.

“Despite lingering economic and policy uncertainty, the U.S. semiconductor market continues to show signs of strength, posting impressive growth in December,” said Toohey. “As the foundation of all modern electronics, semiconductors are critical to America’s economic strength, national security and global competitiveness. By enacting measures that foster growth and remove uncertainty, policymakers can further strengthen the industry and help unlock its full potential in 2013 and beyond.”

Behind everything electronic is a chip. And while many manufacturing jobs have gone overseas, the chip industry is still an economic juggernaut in the U.S.

The semiconductor chip industry now employs about 244,800 people in the U.S., according to the Semiconductor Industry Association. The industry added jobs three times faster than the rest of the U.S. economy (3.7 percent versus 1.2 percent for the overall U.S. economy, according to recently released 2011 data from the U.S. Bureau of Labor Statistics.

The job count is based on direct jobs created by semiconductor companies. Indirect jobs are even more. The $300 billion chip industry is a bellwether for the tech economy, and semiconductor chips are the foundation for the $1.1 trillion high-tech industry that employs nearly 6 million U.S. workers.

“Semiconductor workers – a quarter of a million strong and growing – are creating the technology breakthroughs that improve our lives, strengthen our country and build our future,” said Brian Toohey, SIA president and CEO. “Through their hard work, the U.S. semiconductor industry continues to create jobs and spur growth despite a challenging national economy.”

The data is based on the actual count by the BLS, plus an estimate for the number of jobs created by fabless semiconductor firms, or those that design but do not manufacture their own chips.

“Semiconductor job growth is an encouraging sign for our industry and the U.S. economy,” said Toohey. “With effective government policies that encourage growth and remove barriers to innovation, the semiconductor industry will continue to drive America’s economic strength, national security and global competitiveness.”

[Image credit: Joseph Rupp]

The Semiconductor Industry Association (SIA), the chip industry’s trade group, said the sales for 2011 compared to $298.3 billion a year earlier. Growth in chips is critical for the economy since semiconductor chips are the backbone of everything electronic.

Worldwide chip sales in December were $23.8 billion, down 5.5 percent from the prior month. Fourth quarter sales were $71.5 billion, down 7.7 percent from the prior quarter and down 5.3 percent from the same period in 2010. All sales numbers represent a 3-month moving average, a statistical smoothing tactic.

“Between the natural disasters in Japan and Thailand and the overall impact of a weak global economy, 2011 presented a number of major challenges for the semiconductor industry. Despite these setbacks the industry showed resiliency and posted year on year growth with record-breaking revenues for 2011,” said Brian Toohey, president of the Semiconductor Industry Association. “The health of the industry is a direct reflection of the pervasiveness of semiconductor innovations and their applications in almost every aspect of modern society.”

The industry saw strong demand in segments such as the optoelectronic, sensor and actuator, and microprocessor markets. All showed solid year over year growth. Lamps and image sensors drove growth in the optoelectronic market to $23.1 billion, up 6.4 percent over 2010. Optoelectronic applications bring energy efficiency and low cost in a wide range of products including mobile devices and cameras.

Sensors and actuators, currently the smallest semiconductor market segment, showed the highest year over year growth at 15.5 percent to $8.0 billion in 2011. Sensors can be used to convert temperature, pressure or acceleration into electrical signals. They are growing in consumer electronics, medical devices and automotive systems. Micro-electro-mechanical systems, or MEMS sensors, are popular for tilt controls in smartphones, tablets and other devices.

Microprocessors, used in PCs and other computing devices, grew 7.5 percent to $65.2 billion in the year, thanks to strong enterprise computing demand. The industry is expected to grow in 2012 as it recovers from the supply chain disruptions related to the flooding in Thailand.

MOS Microprocessors, part of the integrated circuit category, which are predominantly used in PCs and other devices that need processing capabilities also experienced year-over-year growth, with an increase of 7.5 percent in revenue to $65.2B making it the second largest semiconductor market segment for 2011, behind Logic. Strong demand in the enterprise computing segment drove microprocessor sales.

“This year our industry will invest billions in capital expenditures and in R&D, which will pay off both in the short and long term.  In fact, reinvesting a large percentage of revenues is a hallmark of the industry. It’s this combination of R&D investment, top engineering talent, high exports and cutting-edge advances that have made the semiconductor industry a cornerstone of the innovation economy,” said Toohey.

[photo credit: tech digest tv]