Chip sales fell again in June, but end may be in sight

While some chip companies are seeing a slight rebound in their stock prices this week, sales of semiconductor chips continued to fall in June, dropping 30.7 percent from the year earlier, according to figures reported Thursday by the Semiconductor Industry Association (SIA).

Semiconductor sales dropped to US$11.6 billion in June, down from $16.7 billion in June of 2000, the SIA said in a statement. The drop amounts to an 8.8 percent decrease from May of this year, the group said. The drop in sales was caused by slowness in the world's major economies combined with excess inventory in the IT market across all product sectors worldwide, the SIA said.

The drop was most pronounced in the Americas, where sales were down 45.1 percent from the year earlier, but sales also dropped 25.3 percent in Asia Pacific and 26.8 percent in Europe, said the SIA, which represents most of the big U.S.-based chip makers.

However, the worst may soon be over for semiconductor companies, the SIA said. Based on inventory reductions so far this year and further reductions expected next quarter, the association said it expects the chip industry to return to sequential growth during the fourth quarter of this year.

Chipmakers including Texas Instruments Inc., Micron Technology Inc. and Applied Materials Inc. have seen their stock prices rally somewhat this week after their stocks were upgraded by analysts at Merrill Lynch & Co. Inc., who also hinted that the market may be heading toward a rebound.

The SIA's global sales report is compiled by the World Semiconductor Trade Statistics (WSTS) organization, which represents about 66 companies.

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