Updated from 9:44 a.m. ESTDespite better-than-expected sales performances from Intel ( INTC), AMD ( AMD) and PC makers in the December quarter of 2001, the chip industry is still searching for a bottom. Opening the week, the Semiconductor Industry Association put out its numbers for December and the full year 2001, and they were nothing to cheer. PC and wireless devices slowed the sector's steep decline, but they're not expected to push the market to strength for a quarter or two. The numbers outline the trauma: Chip sales fell from $204 billion in the high-altitude days of 2000 to a mere $139 billion in 2001, a 32% drop. But SIA president George Scalise focused attention on the second half of 2001, as the fourth quarter's sales seemed to stabilize, falling ever so slightly from $31.57 billion in the third quarter to $31.22 billion in the fourth. Investors would love the fourth quarter to symbolize the sought-after chip-market bottom, but unfortunately sales slid sequentially once again. As for the individual months, December keeps the timing of a bottom alive, because sales dropped off 4% from November to December. Of course, the third quarter contained some influence from business confusion following the Sept. 11 attacks, and a slower December could incorporate some of the postholiday order seasonal slowdown. Needham analyst Dan Scovel shrugs that 2001 "disappointed right up to the bitter end" with a December decline he considers "somewhat worse than seasonally normal." Obviously there's some comfort in the slowed pace of the industry's fall. To put the fourth quarter's performance in perspective, sales dropped 1% sequentially, compared to the 20% drop from the first quarter to the second quarter and the following 15% sales slowdown from the second to third.
|Semi Tough |
Chip sales continued to drop in the second half of 2001
|Source:Semiconductor Industry Association|
It will take several months, however, before the crushing year-over-year declines start to improve. Chip sales in 2001, while not up to 2000's snuff, opened the year at $16.63 billion, with February revenue at $15.48 billion and March at $13.72 billion. December results were 43% lighter in 2001 than they were in 2000.