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Global Economics

Semiconductor Market Shows Signs of Recovery

The declines in PC and cell-phone sales are turning out to be not as bad as predicted

The worldwide semiconductor market showed early signs of recovery in April, thanks to improved demand for PCs and phones, according to the Semiconductor Industry Association (SIA).

Chip sales grew 6.4% sequentially to $14.7 billion, but had still declined 25% year-on-year. The better-than expected result showed that vendors were replenishing their inventory after the recession-fueled decline, the SIA said.

"Consensus forecasts currently project that cell phone unit sales [will] decline by around 7% [in 2009] compared to earlier forecasts of 15%," SIA president George Scalise said. "PC unit sales will decline by about 6% compared to earlier forecasts of a decline in the range of 12%."

PCs and handsets account for 60% of all semiconductor sales. The sales numbers represent a three-month moving average of global shipments.

Scalise said it was too early to tell whether the April result represented a change in the industry's fortunes.

"Visibility remains limited. Two consecutive months of sequential sales growth may be an indication of a return to more normal seasonal sales patterns in some market sectors, albeit at lower sales levels than last year," he said.

Improving sales prompted Gartner to upgrade its 2009 forecast. The research firm is expecting semiconductor revenue to decline 22% to $198 billion for the full year, compared to a previously predicted 24.1% drop.

"While this is positive news, the semiconductor industry is clearly not out of the woods, as there is minimal evidence that demand is returning, except in China," Gartner research VP Bryan Lewis said.

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