By Maisie Ramsay
Monday, April 13, 2009
Battered semiconductor companies saw a slight uptick in business during March, according to a monthly index of electronic component orders compiled by the Electronic Components Association (ECA). However, sales are still down compared to the same period last year and the slump is likely to continue throughout 2009.
Consumer demand has waned for products containing semiconductors, especially handsets and computers. In March, research firm ABI Research forecast continued declines in handset shipments throughout 2009, with the slump leveling out in 2010.
“I think we are seeing adjustment of inventories from manufacturers and distributors based on market slowdown,” said ECA President Bob Willis in a statement. “The industry learned a lot from the train wreck of 2000. There is more transparency in the supply chain, enabling companies to better anticipate changes in demand and adjust accordingly.”
Global electronic equipment production will fall by 11.9 percent this year, compared with a 0.2 percent gain in 2008, according to research from Henderson Ventures. The firm predicts a modest 4.6 percent recovery in 2010.
The report from the ECA is reflective of earlier findings from the Semiconductor Industry Association (SIA). The SIA said global chip sales fell about 30 percent in February, and that demand would be “well below 2008 levels” until the global economy gradually regains strength.
U.S. economic indicators have recently shown signs of stabilization, suggesting that the economic decline could be bottoming out. Jobless claims appear to be leveling off, and some analysts predict the economic contraction to slow as several retailers issued strong sales guidance for the upcoming quarter.
Times have been tough for semiconductor companies, which have little refuge from global economic conditions. The SIA reported that worldwide semiconductor sales had their first year-on-year drop since 2001 this past year. Sales fell 2.8 percent compared to 2007, with steep sequential declines in monthly sales pointing to deepening troubles for the industry. November-to-December sales fell 16.6 percent, to $17.4 billion, and fell 22 percent year-over-year compared to December 2007, when sales were $22.3 billion. Sales fell again in January, slumping 11.9 percent to $15.3 billion, a year-over-year decrease of 28.6 percent compared with last year’s figure of $21.5 billion.