San Jose (CA) - The semiconductor industry posted unexpected strong growth of global sales for the first quarter of this year. The Semiconductor Industry Association (SIA) retreated from its previous prediction of flat sales for the year and now believes the industry will top the record results achieved in 2004.

"Our earlier projection for flat sales for the year as a whole now appears to have been overly cautious," commented SIA George Scalise on the release of semiconductor sales for the first quarter of this year. As it turns out, a cyclical downturn for the industry has not yet arrived and revenues continue to climb.

According to the SIA, global sales of semiconductors in the first three months of 2005 amounted to $55.3 billion compared to $48.9 billion in the first quarter of 2004. Sales were up by 0.4 percent sequentially from revenues of $55.1 billion in the fourth quarter of 2004. March sales, at $18.4 billion, were up by 2.2 percent from the February level of $18.0 billion.

"Worldwide sales of semiconductors continued to outpace forecasted levels in the first quarter of 2005," said SIA President George Scalise. "The unexpected strength of semiconductor sales, with 13 percent growth over a very strong period a year ago, is a good sign for the industry."

Once again, semiconductor sales were mainly driven by growing demand for wireless handsets, but also sales for personal computers, and consumer electronics were higher than expected, according to the SIA. "Consumer spending on electronics was stronger than historical patterns for the first quarter despite reports of declining consumer confidence," Scalise said.

While Scalise was careful to make any predictions for the whole year, he indicated that the industry could surpass its record sales level hit in 2004. Last year, manufacturers reported revenues of $213 billion, up 28 percent from the prior year.

Market research firm iSuppli gets more specific and today said it expects 6.1 percent sales growth for the overall industry, resulting in revenues of more than $240 billion. However the company believes the pure-play foundry segment to decline in sales due to slower growth in electronics equipment and a "major rise in excess semiconductor inventories in 2004." According to iSuppli's forecast, revenues of the pure-play foundry industry, which consists of firms such as SMIC, TSMC and UMC, will decline by 6.2 percent in 2005, falling to $15.9 billion, down from $16.95 billion in 2004.

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Source : Tom's Hardware US