Chip Sales Grew in August

According to the latest news from the Semiconductor Industry Association (SIA), worldwide sales of semiconductors increased 5% sequentially in August, although they were down 16.1% year over year. The rate of decline has slowed in the first six months of 2009, and sales declined 25% year over year.

SIA president George Scalise added that the continued recovery in consumer spending has led to the rise in sales. Industry momentum continues to be positive after a steep downturn in the second half of 2008. In particular, sales of netbook personal computers accounted for 17% of notebook personal computer (PC) unit sales, with further growth potential.

Personal computers have become especially attractive to consumers, as average selling prices for PCs have declined by around 14% while memory content has increased by 25% in the last year. However, recovery of demand in the enterprise sector continues to be slow.

Last month, most chipmakers raised their quarterly projections, backed by an improving market scenario. The world’s largest technology company, Intel Corp. (INTC - Analyst Report) raised its third quarter revenue forecast driven by strong demand for programmable chips and microprocessors. This was followed by Altera Corporation (ALTR - Analyst Report) which raised its revenue guidance for the third quarter, driven by improving market conditions.

Xilinx, Inc. (XLNX - Analyst Report) followed suit and upgraded its guidance driven by broad-based strength across all end-markets and geographies. Top player Texas Instruments (TXN - Analyst Report) upgraded its forecast for the third quarter driven by unpredicted demand in all segments, particularly the analog segment.

Skyworks Solutions Inc. (SWKS - Analyst Report) raised its guidance for the fourth quarter of fiscal 2009, driven by broad-based, massive improvements in order demand. Microchip Technologies Incorporated (MCHP - Analyst Report) raised its guidance pushed by good backlog and strong bookings and sales activities in the first two months of the quarter.

It seems the semiconductor is all set for a strong unexpected rebound in business after a year of turmoil that led to significant declines in demand and a resulting inventory correction.