Worldwide chip sales soar on PC, cell phone demand

Global chip sales jumped in the second quarter on robust demand for PCs and wireless handsets, the Semiconductor Industry Association said on Monday.

Worldwide semiconductor sales during the second quarter totaled $74.8 billion, up from $51.7 billion during the same quarter a year ago, according to the SIA. Chip sales also grew sequentially by 7.1 percent.

The strong revenue growth was due to increased demand for a range of products, including consumer electronics, PCs and automobiles, said John Greenagel, an SIA spokesman. PCs and cell phones account for the bulk of semiconductor sales, and automobile sales have recovered after being dismal for many years, Greenagel said. Emerging markets were big contributors to growing chip sales, with an increased demand for PCs and cell phones in countries such as India and China.

The second-quarter growth was "dramatic" because semiconductor sales were depressed over the first two quarters last year, Greenagel said. Demand for semiconductors took off in the second half of last year, so year-over-year revenue growth rates in the second half of this year could be less than in the first half. Demand for semiconductors will still remain strong, Greenagel said.

The SIA is predicting sales in 2010 to grow 28.4 percent year-over-year to $290.5 billion, which would be a record, Greenagel said.

The growth notwithstanding, SIA is being cautious about macroeconomic factors for the second half, such as the weak economy in Europe. But Europe is a smaller semiconductor market, and emerging markets should sustain revenue growth, Greenagel said.

In other chip market news, research firm iSuppli on Monday raised its 2010 global semiconductor revenue on strong demand for consumer electronics. iSuppli said chip sales would rise year-over-year by 35.1 percent to reach $310.3 billion. The survey firm in May projected a 30.9 percent revenue growth.

The $80.7 billion increase will be "the largest annual expansion in semiconductor revenue in history," iSuppli said in a statement. But the growth could take its toll on vendors, who may fall short on manufacturing capacity to meet the growing semiconductor demand. That could also lead to a rise of semiconductor prices.

"Careful management of semiconductor inventories and tight controls on manufacturing capacity have resulted in an environment where supply is not able to match demand," said Dale Ford, senior vice president for iSuppli.

Semiconductor revenue hit bottom by the middle of 2009 and chip makers cut back on chip production to reduce supply.

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