After a three-year run of record chip sales, the widely expected semiconductor industry downturn appears to be at hand.
Chip sales fell sharply in January on both a sequential and annual basis, according to the World Semiconductor Trade Statistics (WSTS) organization. It was the first year-to-year decline in chip sales for any month since July 2016.
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John Neuffer, the Semiconductor Industry Association’s president and CEO, said through a statement that semiconductor sales got off to a slow start in 2019, with sales down compared with December 2018 across all major product categories and regional markets.
“It seems clear the global market is experiencing a period of slower sales,” Neuffer said.
Semiconductor sales reached a record $468.8 billion in 2018, up 13.7% from 2017, capping a historic three-year run that saw the industry set a new all-time sales high each year. The latest WSTS forecast calls for semiconductor sales to increase by 2.6% this year, although most independent analysts are less optimistic.
Last month, Neuffer — whose group opposes the Trump administration’s tariffs on Chinese goods — warned that the U.S.-China trade war, falling memory prices, and an economic slowdown in China could lead to a period of slower growth or even contraction in chip sales.
The three-month rolling average of chip sales fell to $35.5 billion in January, down 5.7% compared to January 2018 and down 7.2% compared to December 2018, according to the WSTS.
In the Americas region, chip sales for January were down 15.3% year to year and down 13% month to month, according to the WSTS.
Despite the slowdown in sales, Neuffer maintained that the long-term outlook for the industry remains promising “due to the ever-increasing semiconductor content in a range of consumer products and future growth drivers such as artificial intelligence, virtual reality, the internet of things, and 5G and next-generation communications networks.”
