Chip sales tipped for upturn

The Semiconductor Industry Association predicts a second-half upswing, echoing comments by Intel chief Craig Barrett, but other experts remain sceptical

The Semiconductor Industry Association (SIA) has joined its voice to those predicting that the computer-chip business will nose upward by the end of the year. Intel chief executive Craig Barrett and analysts Merrill Lynch have made similar statements in the past few days.

The SIA said that worldwide semiconductor sales dropped another 8.8 percent month-to-month in June, and were nearly a third -- 30.7 percent -- below their levels in June of last year. Sales stood at $11.6bn (about £8bn) in June, compared to $12.7bn in May, the SIA said, and the decline spared no geographic sector or product type.

But president George Scalise predicted that the market would bottom out in the third quarter and then return to sequential growth. "Based on the inventory reduction that has occurred in the first half of 2001 and the further reductions projected for the third quarter, we believe the industry will return to sequential growth in the fourth quarter of this year," he said in a prepared statement.

The American market showed the largest sequential drop in June, falling 12.9 percent to $2.91bn. Europe followed with a 10.6 percent drop to $2.53bn; Japan declined 5.8 percent to $2.97bn; and Asia Pacific skidded 5.8 percent to $3.18bn.

US sales were 45.1 percent below their level in June of last year, and European sales were down 26.8 percent year-on-year.

Earlier this week, speaking in Penang, Malaysia, Intel's Barrett told reporters, "The computer industry has bottomed out. That in itself tells you that you're looking at when it's going to take off." Merrill Lynch also sounded a hopeful note about the semiconductor market on Wednesday, saying that it may have finally hit bottom.

However, other analysts and computer makers are more cautious. Last week, for example, HP Chairman Carly Fiorina warned that economies were weakening around the globe, spurring her company to again lower earnings projections and to initiate further operating cuts, including plans to cut 6,000 more jobs. "I do not expect a second-half recovery in 2001," Fiorina said at the time.

The SIA's report is based on figures from the World Semiconductor Trade Statistics group, which polls about 66 companies.

eWeek's Ken Popovich contributed to this report.

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