Chip sales struggling globally

Global chip sales suffered a year-on-year drop for the first time since 2001. The drop was attributable to a slump in demand for the major drivers of CPU sales, such as PCs, mobile phones and corporate IT products, according to the Semiconductor Industry Association (SIA).

Chip sales struggling globally

Although total shipments of mobile phones and memory products grew, price pressure caused overall sales of chips to drop in these markets.

Chip sales dropped to $248.6 billion in 2008, marking a 2.8% drop from $255.6 billion in 2007. According to the SIA, the fall in sales was largely due to poor performance in the fourth quarter of 2008, historically a strong quarter for CPUs. In December, revenues declined by 16.6% from November 2008, when sales were $20.9 billion.

“As consumers worldwide drive over 50% of demand for semiconductors, the fortunes of the chip industry are increasingly linked to macroeconomic conditions such as GDP, consumer confidence, and disposable income,” says SIA President George Scalise.

“Sales of electronic products held up reasonably well during the first nine months of 2008, but fell sharply as turmoil in the global financial industry unfolded.”

Scalise added that the chip makers are facing tough times, and urged governments to take action to stimulate the market.

“The industry is currently facing an unprecedented period of uncertainty. A resumption of sales growth will depend in part on the effectiveness of various measures now under consideration by the Federal government to restore consumer confidence, improve liquidity, and stimulate economic growth,” he says.

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