Semiconductor Sales Hit Bottom In First Quarter

The semiconductor market's weakness stretches back to the fourth quarter of 2007, which followed an industry revenue peak in the previous quarter.

Semiconductor sales bottomed out in the first quarter and revenues are expected to increase year-over-year in the fourth quarter, a market research firm said Thursday.

The positive note was the bright spot in the otherwise "miserable conditions" in the semiconductor market in the quarter, iSuppli said. Revenue in the quarter plummeted 33.8% from the same period a year ago to $54.5 billion and 18.8% from the fourth quarter of 2008.

However, for the rest of the year, sales are expected to improve. iSuppli expects industry revenue to rise quarter-to-quarter by 7.1% in the second quarter, 10.4% in the third and 4.9% in the fourth, when sales are expected to exceed those in the fourth quarter of 2008.

The semiconductor market's weakness stretches back to the fourth quarter of 2007, which followed an industry revenue peak in the previous quarter. However, the economic recession has exacerbated the industry problems, particularly in the sale of chips to computer makers. The PC and server market has been hit hard in the economic downturn with consumers and businesses cutting back on spending.

Of the more than 130 semiconductor suppliers tracked by iSuppli, only six managed to increase revenue in the first quarter of this year, compared to the previous quarters. "Even among those six suppliers, four increased their revenue by only 1% to 3%," iSuppli analyst Dale Ford said in a statement.

The six semiconductor suppliers that saw revenue growth in the quarter were Dialog Semiconductor, Macronix International, MediaTek, Osram, Telegent System and TriQuint Semiconductor. MediaTek was the highers performer with a 10% rise in revenue both sequentially and year-to-year.

The dismal overall performance was attributed directly to the weak global economy "Although the first quarter is typically weak for the global semiconductor industry, the sharp declines in semiconductor during that period and in the fourth quarter of 2008 reflect the impact of the global economic downturn on the worldwide chip business," Ford said.

By region, companies in the Americas, including the United States, have fared better during the economic downturn, which started in the fourth quarter of 2008. The combined revenue decline in terms of U.S. dollars for companies in the region has been 30.8% from the third quarter of 2008 to the first quarter of this year. During the same timeframe, European companies have suffered a 44.5% decline and Japanese chip suppliers have seen a 43.5% drop.

The iSuppli report followed by almost a week Gartner's finding that sales of equipment sold to semiconductor makers bottomed out in the second quarter of this year. A gradual improvement in global equipment sales on a quarter-by-quarter basis is expected throughout the rest of the year and into 2010, Gartner said.

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