UK chip sales sag

Semiconductor sales around the world are rising, in a good sign for the IT industry's recovery - but the latest figures for the UK and the rest of Europe are more sobering
Written by Matthew Broersma, Contributor
European chip sales in July stayed in the doldrums, despite encouraging figures for the industry globally, according to the European Electronic Component Manufacturers Association (EECA) and the European Semiconductor Industry Association (ESIA).

A separate set of figures from the Distributors' and Manufacturers' Association of Semiconductor Specialists (DMASS) found that UK chip sales were particularly badly off, declining by 14.7 percent sequentially in the second quarter.

However, the shifting exchange rate between the Euro and the US dollar is causing significant distortion in the picture. European semiconductor sales measured in dollars show significant growth.

The EECA and ESIA, citing the same figures used by the Semiconductor Industry Association (SIA), said European semiconductor sales for July totalled 2.136bn euros (£1.47bn), a decline of 5.1 percent compared with the same month last year. Sales have decreased by 7.1 percent in 2003 so far this year, compared with the same period last year.

The EECA's figures show that year-on-year declines for Europe as a whole have been levelling off since early 2002, when sales were more than 30 percent down on the previous year.

Measured in dollars, however, European chip sales totalled $2.466bn (£1.56bn) for July, a 14.4 percent increase compared with the same month last year. Year-to-date sales show an increase of 13 percent compared with the same period last year, and month-on-month growth was 2.3 percent.

According to the DMASS figures, the UK saw a 14.7 percent decline in Q2 compared with Q1, following an 18.4 month-on-month decline in Q1. French sales declined by 18.7 percent for the quarter, while Germany's chip sales grew 11.7 percent and Eastern Europe led with 29 percent growth compared with Q1.

The mixed signals contrast markedly with positive signals from the global chip market. Global sales of semiconductors rose to $12.9bn (£8.21bn) in July, according to the Semiconductor Industry Association.

The July sales figure compared with $12.5bn in June, and marked the fifth consecutive monthly increase, the industry group said. Sales also were up 10.5 percent from the July 2002 total of $11.68bn.

Other positive news has brightened prospects for an IT industry recovery, although signals for the UK have been generally more mixed. Gartner and IDC recently reported encouraging figures for European server sales, although in the UK growth in higher-end servers has stayed low.

Globally, Aberdeen Group said an analysis of the Q2 2003 financial results for the top 20 IT suppliers shows a year-over-year revenue increase of 6.1 percent, which is the best result since the first quarter of 2001. However, Aberdeen said the underlying data indicated that growth would remain moderate, rather than approaching the explosive growth of the late 1990s.

CNET News.com's Ed Frauenheim contributed to this report.

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