The Semiconductor Industry Association (SIA) reported on Thursday the worldwide sales of semiconductors are up to $19.6 billion in June, up over 9% from June 2005, however Wall Street analysts remain unimpressed.
The SIAâ€™s Global Sales Report, a three-month moving average of sales activity, reported American sales grew slightly in June from May, while European sales dropped 1.9% and Asia-Pacific fell 0.9%. Year-to-date, sales are up 12.8% in Asia-Pacific and 11.4% in the Americas, but ahead just 1.4% in Europe, according to the report.
In what some perceive to be a slow time for the industry, George Scalise, President of the SIA said semiconductor unit sales have grown and will continue to grow.
The semiconductor sales numbers reported today reflect the mixed earnings results we have seen in the industry over the past few weeks, said Scalise. Unit demand has remained strong this quarter, up about 5% across the industry.
As the report shows semi-conductor sales increasing as a whole, experts believe most major market segments were below seasonal averages.
Joe Osha of Merrill Lynch states a theory that unit growth peaked in April of 2006, and that June marks another decline in both unit and growth figures.
On a quarterly basis, DRAM was the only sector above seasonal, while DSP, Flash, MOS logic, and MPU all came up weak, Osha said. Analog was close to in line.
Looking ahead, the SIA believes that sales should continue to grow. Despite the current uncertainties in the global economy, Scalise said, he remains confident that sales will reach record high levels this year as previously predicted.
ThinkEquity analyst Eric Ross said that the numbers could indicate the year will be softer than expected.
We continue to believe that 2006 will be a slower year than most are modeling, Ross wrote in a note to clients. While many are modeling 10 percent to 15 percent (sales increase) versus 2005 (down from 15 percent), we expect growth of close to 8 percent to 10 percent.
Chris Danely of J.P Morgan also expresses concern saying the semiconductor industry has too much inventory as [year-over-year] unit growth was 23%, roughly twice the normal [year-over-year] unit growth of 10%.
â€œWe are maintaining our neutral stance on the semiconductor sector as it appears several leading indicators such as utilization rates, gross margins, EPS estimates and pricing have peakedâ€ he concludes.