Report: Chip Sales Suffered Fourth Largest Decline In 35 Years

According to the World Semiconductor Trade Statistics (WSTS) organization, which pools sales data from chipmaker member companies, global chip sales have dropped by 15.5% sequentially in the first quarter, accounting for the largest decline in the past 35 years. The sales dropped 13% on a year-over-year basis.

Fourth Largest Decline In Four Decades

WSTS said that chip sales totaled $96.8 billion in the first quarter, down from the $114.7 billion the companies made in the previous quarter. The first-quarter revenue was down 13% from $111.1 billion on a year-over-year basis.

The three-month average revenue in March was $32.3 billion, down 1.8% compared to February this year, and 13% lower compared to March 2018.

John Neuffer, president and CEO of the Semiconductor Industry Association (SIA) trade group, said:

“Sales in March decreased on a year-to-year basis across all major regional markets and semiconductor product categories, consistent with the cyclical trend the global market has experienced recently.”

IC Insights, a market research firm, said that the real first-quarter revenue decline was actually 17.1%, calling it the largest sequential decline since 2001 and the fourth largest since 1984. There have been seven chip sales quarterly declines larger than 10% since 1984. In each year in which this occurred, the chip market declined by at least 9% for the year, according to IC Insights.

Double-Digit Decline Expected In 2019

IC Insights noted that the first quarter of the year is usually the weakest, with an average decline sequentially of 2.1% over the past 36 years. However, this year, the drop was much larger than the average, and the research firm is expecting double-digit decline for the year. Intel, one of the main party's responsible for the slowdown in PC sales for the last couple of quarters, has also said that it expects its own CPU shortages to last until at least the third-quarter this year.

China and Europe registered sales growth in Match compared to the previous month, but Europe saw a decline of 6.8% year-over-year. All the other regions saw declines of over 9%.

Neuffer urged U.S. regulators to adopt policies that would spur sales growth for the chip industry, such as increasing investment in scientific research, attracting and retaining a top technology workforce, and ensuring open markets and strong protection of intellectual property.