Global chip sales rise in October: survey

AMSTERDAM (Reuters) - Global sales of semiconductors rose in October, keeping the chip industry on track for 8 percent growth this year as demand for electronic gadgets has been accelerating, a survey showed on Friday.

Revenues rose 6.8 percent to US$20.05 billion in October versus the year-ago period, according to data from the World Semiconductor Trade Statistics (WSTS) association. The WSTS has 72 members, grouping companies that represent 85 percent of the world's semiconductor market.

Revenues, measured as a three-month average to eliminate seasonal fluctuations, were up 2.5 percent compared with the month of September.

"Since August, semiconductor sales have been significantly better than normal seasonality on the back of strong demand for mobile phones, LCD TVs, games consoles, MP3 players and computer notebooks. Christmas retail sales also looks strong," Dresdner Kleinwort Wasserstein analyst Janardan Menon said in a note.

Excluding the smoothing effect of averaging sales over three months, October sales were up 5.9 percent year-on-year and down 21 percent versus September.

A monthly decline is normal for the first month of a quarter but the 21 percent decline in October from September compares with declines of between 12 and 24 percent in the October months of the previous four years. This year was below average.

"October revenues disappointed largely due to a slowdown in discrete units," said J.P. Morgan, referring to commodity chips with single functions.

There was also significant price pressure in microprocessors, which are the brains of electronics devices, after several months of sharp price increases.


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JP Morgan maintained its 8 percent sales growth target for 2005, as it expected accelerating demand in the final months of the year. Dresdner raised its global chip sales forecast to 8 percent growth from the record US$218 billion in 2004, up from an earlier 7 percent, and expects 16 percent growth next year.

Most analysts and semiconductor trade groups now expect growth of around 8 percent, on the back of strong demand for electronics goods, in particular for mobile phones around the world and for consumer electronics in the United States, where Thanksgiving kicked off the holiday shopping season.

Demand is driven by lower prices and better features of a range of recently introduced gadgets such as thin TVs, hard disk recorders, portable music players and networked devices.

The year-to-date chip sales growth rate was 6.1 percent in October, versus an upwardly revised 6.1 percent a month earlier.

Sales in October rose in all regions compared with September, but the year-on-year increase was almost entirely accounted for by the Asia Pacific region, which is also where electronics manufacturing is growing.

So far this year, sales are up 1.1 and 1.2 percent in Europe and the Americas respectively, down 3.1 percent in Japan, and up 15.3 percent in the Asia Pacific region.

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