Electronics Industry Update

Worldwide Sales of Semiconductor Devices	Manufacturers' Shipments of Electronic Components
Historical Data: World Semiconductor Trade Statistics (WSTS) Forecast: Semiconductor International	Historical Data: U.S. Department of Commerce Forecast: Semiconductor International
Manufacturer's Shipments of Computers	Manufacturers' Shipments of Communications Equipment
Historical Data: U.S. Department of Commerce Forecast: Semiconductor International	Historical Data: U.S. Department of Commerce Forecast: Semiconductor International

Semiconductors
According to preliminary data released by the Semiconductor Industry Association (SIA), the value of worldwide chip sales declined by a slight 0.2% between May and June to a level of $11.35B. However, cumulative sales for the entire three months of this year’s second quarter were 5.8% stronger than during the first quarter of the year. So, although the semiconductor industry’s growth trend is uneven — and momentum is proving hard to attain — it’s clearly moving in the right direction and is in the process of recovery.

But the over-the-year trend remains under water — although it has floated ever closer to the surface with each succeeding month of this year. June 2002 global chip sales were still estimated to be worth 1.6% less than during the same month of 2001. There’s no question that market conditions have improved dramatically in recent months, though: As recently as this past September, worldwide chip sales were trailing the year-earlier total by 44.4%.

Between May and June of this year, semiconductor sales values rose in two of the four broad regions of the world. Sales fell moderately over the month in Europe and North America, but rose throughout the Asia-Pacific.

Following are the May-to-June semiconductor sales trends by major geographic region (with the 0.2% decrease in global sales being the relevant point of comparison):

• The Americas: -2.6%
• Europe: -4.5%
• Japan: +5.2%
• Asia-Pacific (excluding Japan): +0.2%

The dollar value of chip sales to the Americas this June was 11.0% below the region’s June 2001 level — a much steeper contraction than the 1.6% over-the-year decrease in worldwide sales. And sales to Europe during June 2002 were valued at a level 14.4% below the June 2001 total.

At the same time, chip sales to Japan have improved markedly during the past several months, after plunging throughout most of the second half of last year. The estimated dollar value of sales to Japan was 16.1% lower this June than during June of 2001 — still considerably worse than the global-average trend, but not nearly as bad as during the final months of 2001 or the first couple of months of this year when the over-the-year monthly trend averaged a 47.1% decline.

But recovery is already fully established in the other parts of Asia. June 2002 chip sales to the Asia-Pacific market (all nations of the region, save Japan) were valued at a level 29.5% above their June 2001 total. So the semiconductor market in Taiwan, China, South Korea, Singapore, and other (non-Japan) nations in the Asia-Pacific region is where the “action” already is this year — and a model of recovery that other parts of the globe hope to emulate as we move into 2003. This will probably be difficult to do, however, since much of the resurgence in the Asia-Pacific market can be attributed to increasing momentum from the migration of semiconductor customers (end-market and component manufacturers alike) to lower-cost contract manufacturing facilities throughout much of the region. 

Through the first half of 2002, the value of worldwide semiconductor sales was running 14.9% behind the total for the first six months of 2001. But there’s little question that market conditions during the final six months of this year will continue to improve.

For 2002 as a whole, global chip sales are likely to be little changed from the 2001 total — up or down a couple of percentage points, depending upon how quickly average prices recover. But during 2003 we’re expecting to see solid growth in the market on the order of 25-30% — although this solid recovery would still leave 2003’s dollar value of semiconductor chip sales about 10% below the robust $204.4B level achieved during 2000.

End-Market Demand

Data compiled by the U.S. Commerce Department shows that the dollar value of shipments from U.S. manufacturers of computers reached an estimated $3.74B during June 2002, a total 2.2% above May’s revised level. This follows a 2.1% drop in shipments between April and May, but a 3.8% increase between March and April. Despite the May-to-June improvement, however, the value of June 2002 computer industry shipments was still a discouraging 16.7% below the total for June 2001.

However, in contrast to the shipment trend, the value of new orders received by U.S. manufacturers during June showed some deterioration. New orders to U.S. computer equipment manufacturers declined by 4.8% between May and June, following steep monthly losses during both March (-7.9%) and April
(-3.1%) — but immediately following an encouraging 6.9% increase during May.

The value of orders to the industry this June was still running 22.1% behind the total for the same month last year. Year-to-date (i.e., over the first six months of 2002), both shipments and orders were about 25% lower than during the first half of 2001.

June 2002 shipments were worth an estimated 5.4% more than during the same month last year. And the cumulative value of industry shipments through the first half of this year was running 4.5% ahead of the total for the first six months of 2001.

The value of shipments from U.S.-based manufacturers of non-defense communications equipment was 3.9% lower this June than in May. The industry’s June 2002 shipment level remained a steep 25.3% below the total for June of 2001.

And the trend in orders was even more discouraging. The value of new orders received by U.S. communications equipment manufacturers plunged by 18.5% in June. This followed a revised 2.8% decline in orders the months before (the government had initially estimated that orders had risen by almost 3% between April and May). This represents a turnaround from the hopeful numbers that we saw during the first-third of 2002, when orders increased during three of the four months. And the June 2002 orders level was still 23.1% below the volume recorded during the same month of 2001.

Over the first six months of 2002, the total value of industry shipments was running 27.5% behind the none-too-impressive pace set during the first half of 2001. New orders to U.S. non-defense communications equipment manufacturers were worth 23.1% less during the first half of this year than over January-June of 2001.