Chip sales rise 13 percent in Q1 over 2002

Revenue from processor sales increased in the first quarter of 2003 as compared to last year's first quarter, fueling hopes that the semiconductor market is growing at a steady rate after two off years.

Chip vendors reported revenue of US$36.4 billion in the first quarter, up 13 percent from last year's first quarter, the Semiconductor Industry Association (SIA) said Monday in a press release. Sales also grew 2.6 percent sequentially in March compared to February, the SIA said.

The industry's revenue grew only 1.3 percent in 2002, and lost substantial ground in 2001. Despite the trend, the SIA continues to predict double-digit revenue growth in semiconductor sales for 2003, citing strong sales among consumers and the growth of wireless networking technologies.

The SIA also anticipates that a large number of companies will replace their PCs with new ones later in the year. PC and chip companies have been predicting this for several months but it hasn't happened. Corporations have historically replaced their PCs every three years to take advantage of new technology, but the last wholesale PC upgrade cycle occurred in 1999 amid the Y2K frenzy.

Asia-Pacific, which excludes Japan, continues to be the hottest spot for semiconductor sales, generating 36 percent of the world's chip revenue. The region is home to many PC and component manufacturers, which increased their spending on semiconductors by 17.2 percent in the first quarter. Japan itself is a large enough market to occupy second place with 23 percent of all semiconductor purchases revenue.

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