The global semiconductor market in February expanded 18% from the year-ago month but declined 3% on a sequential basis as pricing pressures continued to hurt key segments such as DRAM. February sales rose to $12.2 billion on a three month moving average basis, from $10 billion in February 2002 and down from $12.3 billion in January, the Semiconductor Industry Association said in a report today.
After expanding steadily over recent months, the semiconductor market appears to be growing at a slower pace perhaps due to the political turmoil in the Middle East and the weak global economy.
Even the Asia-Pacific market, which has led the market upturn with strong sales in China, slowed in February. A build up of wireless phone inventory in the last quarter of 2002 also led to the weaker sequential results, industry executives said.
"The recovery in the semiconductor industry that has been underway for more than 15 months appears to have stalled in February," said George Scalise, president of the SIA, in a statement.
"Demand has softened in the markets that drove growth throughout the past year, including PCs, global wireless and consumer," Scalise added.
Actual chip sales rose to $11.2 billon from $9.8 billion in February 2002 and $10.8 billion in January.
The latest results showed chip sales rose from the year-ago month in all regions except the Americas, which continued to lose market share to Asia-Pacific as more manufacturers relocate facilities to the lower-cost area.
However, all the market segments declined from the preceding month, sparking concerns the traditional January weakness may have extended well into the remaining months of the first quarter.
February sales to the Asia-Pacific market rose to $4.29 billion, up 26% from $3.41 billion in the comparable 2002 month and down from $4.52 billion in January.
The Americas remained weak with February sales coming in at $2.41 billion, down from $2.54 billion and $2.52 billion in both January and February 2002, respectively.
The SIA's Scalise said the market has been hurt by the political uncertainty caused by the war in the Middle East but said sales should rebound in the second half of the year.
Sales to the DRAM market continue to be affected by the negative pricing pressures in that segment, according to analysts.
Total memory sales rose 4% year-over-year to $2.09 billion but fell from $2.18 billion in January while microprocessor sales strengthened to $3.19 billion, up 16% from the year-ago month.
"DRAM, memory used in PC's, was the weakest category, as expected," said Bruce Diesen, an analyst at Handelsbanken Capital Markets, Stockholm. "Microprocessors were the strongest category, helped by new products allowing price increases by Intel."