San Jose (CA) – Chip manufacturers reported slower chip sales for November. However, the magnitude of the decline in revenue growth was in line with some hiccups over the past five years and was only one fourth of the decline that followed the dotcom bust in early 2001.   

The semiconductor industry has been caught in net of bad news for some time now and it should be expected that there is a certain focus on positive news that could indicate a light at the end of the tunnel. For chip manufacturers, the light is very faint, but has not disappeared yet.

The Semiconductor Industry Association (SIA) today said that November chip sales dropped by 9.9%, from $23.12 billion in November 2007 to $20.84 billion in November 2008. The sequential decline was 7.2%. The growth decline was substantial, but double digit revenue drops are not unusual in this industry and have happened on three other occasions in early 2003, in mid-2004 and early 2005. However, the industry dipped into negative growth for the first time since the dotcom bust: Back in 2000/2001, the revenue decline for chip manufacturers was much more significant, when the industry went from a 40% growth rate to a 40% decline in a matter of four months.

“The worldwide economic crisis is having an impact on demand for semiconductors, but to a lesser degree than some other major industry sectors.  We expect the industry will remain the second largest exporter in the U.S. for 2008” said SIA president George Scalise in a prepared statement.  “Not all segments of the industry are being affected equally by the downturn.  The memory market which has been under severe price pressure throughout the year has seen sales decline significantly while many other product sectors have year to date sales above 2007 levels.” Scalise added.

Excluding memory products from the equation, the decline in growth was only 4.8% year-over-year, according to the SIA. Sales for the first eleven months of 2008 were $232.7 billion, which translates into an increase of 0.2% from the first eleven months of 2007 when sales were $232.2 billion. Excluding memory products, year-to-date industry sales increased 5.6%.

The strongest decline was seen in the Americas, where revenue dropped by 19.5% over November 2007, the SIA said. Europe followed with a decline of 13.9%, Japan with 7.3% and Asia-Pacific with 6.2%.

Scalise noted that the SIA has urged Congressional leaders to move quickly to pass legislation that will strengthen consumer confidence and stimulate government and industry investment that will drive near term economic growth.