Electronics Industry Update

Sales increased about 5% from the disappointing January level, but February worldwide sales still came in 0.4% short of the February 1997 level. That total itself (i.e., February 1997) was more than 13% lower than the dollar value of semiconductor sales during the same month in 1996. Unit sales growth improved a bit during February but remains well below the average growth trend for full-year 1997. The average selling price for discretes sold this February was 5.4% lower than a year earlier, while the average price received for all ICs sold was down a disturbing 17.5% over the year. The most significant problems are in the memory market; February DRAM sales ran 20.6% behind their year-earlier level. The microprocessor market is showing strains of overcapacity and weakening worldwide demand as well; the February dollar value of microprocessor sales was 7.4% below the February 1997 level. End-market demand is holding up well so far in the United States and Europe, but markets are continuing to weaken in Japan and most of the Asia/Pacific region. U.S. computer industry output was 34.8% higher in February than in February 1997, and production of communications equipment was about 10% higher. Most key economic indicators point to another good year for the U.S. economy in 1998.

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