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Chip market experienced slower growth in June

Posted: 03 Aug 2006     Print Version  Bookmark and Share

Keywords:Terra Securities  World Semiconductor Trade Statistics  XX  XX  XX 

Monthly chip sales are expected to have deteriorated to a three-month average of Rs.90,093.60 crore ($19.4 billion) in June from Rs.91,486.80 crore ($19.7 billion) in May, according to Bruce Diesen, an analyst with Terra Securities ASA. The reason is a PC slow down that is likely to get worse in the next quarter, the analyst said.

Official figures from World Semiconductor Trade Statistics are (WSTS) scheduled to be released by the U.S. Semiconductor Industry Association in the next few days.

"We see unadjusted sales at Rs.1,02,911.04 crore ($22.16 billion), up 9.7 per cent year over year, a slightly slower growth rate than in May," said Diesen.

The SIA's Global Sales Report is tabulated by WSTS as a moving three-month average to reduce the swings due to reporting effects from different companies.

It have been estimated by market researcher iSuppli Corp. recently that Intel is facing a large inventory overhang for its processors and chipsets due to a slowdown in the PC industry. In terms of the general trend Diesen agreed.

"Although we think PC production actually improved in June, we expect some slippage in PC chips. We expect strong sales of handset chips in June," he said. However, Terra estimates that world chip market will rise only five per cent this year, compared with 2005. This is at the far low end of a consensus that has built up around 10 per cent for the market's annual growth. "Our June forecast implies sales growth of 8.2 per cent in Q2, but we see the growth rate moderating to less than six per cent in Q3 due to the PC slowdown," added Diesen.

- Peter Clarke

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