Global sales of semiconductors in May grew 4.5% month-on-month (m-o-m) to US$24.7 billion (RM79.5 billion) from US$23.6 billion in April, said US-based Semiconductor Industry Association (SIA).
Year-on-year (y-o-y), sales jumped 47.6% from US$16.7 billion in May 2009, but the annual rate fell from 50.4% reported in April, SIA said in a statement on its website last Monday.
All monthly sales numbers represent a three-month moving average. SIA president George Scalise said sales of semiconductors in May reached a new high and remained on pace to reach its forecast of a 28.4% growth to US$290.5 billion in 2010.
“Chip sales have been buoyed by strength in sales of personal computers, cell phones, corporate information technology, industrial applications and autos. Unit sales of personal computers are now expected to grow by 20% this year and cell phone unit sales are predicted to be up 10% to 12% over 2009 levels,” he said, as emerging markets, including China and India, fueled sales of computation and communications products.
“The automotive market is also slowly recovering after several years of weak sales. Demand from the corporate information technology and industrial sectors that had pushed out replacement cycles during the global economic recession is beginning to come back,” he said, adding that growth was likely to continue to slow in the second half of 2010.
“Growing concerns about issues such as government debt, declining consumer confidence, and pressures on government spending do not appear to have affected worldwide semiconductor sales to date, but given the semiconductor industry’s growing sensitivity to macroeconomic conditions, these issues bear watching in the second half of 2010,” said Scalise.
RHB Research, which had highlighted the risk of a sharper-than-expected global economic slowdown and had downgraded its view on the semiconductor sector, said yesterday earnings growth for semiconductor players would likely begin to moderate given the rapid growth in the first five months of this year.
“Therefore, we have downgraded our target PER for semiconductor stocks under our coverage from 15 times to 11 times CY11 PER to reflect a more modest growth in the coming quarters and in line with the weighted average PER for regional peers,” it said.
It said the prolonged Euro debt crisis may be detrimental to consumer sentiment in the region. Europe accounts for an estimated 19% of the global market for consumer electronics. “Moreover, a sharper-than-expected economic slowdown in China may also impact consumer demand.
“In view of the risk of potentially weaker demand for chips, we are maintaining our neutral stance on the sector (downgraded from overweight in our report dated June 30),” it said.
It said risks included slower-than-expected economic recovery dampening demand for equipment and consumer electronics; strengthening of ringgit against the US dollar; and higher raw material cost.
Technology-related stocks declined yesterday, with Mesiniaga Bhd down six sen to RM1.80, Malaysian Pacific Industries Bhd down five sen to RM6.15, while Unisem (M) Bhd and Eng Tekonologi Bhd fell three sen each to RM2.94 and RM2.26.
Green Packet Bhd fell 2.5 sen to 92 sen, Globetronics Technology Bhd and Heitech Padu Bhd shed two sen each to RM1.39 and RM1.09, Vitrox Corporation Bhd down one sen to 77 sen while Pentamaster Corporation Bhd shed half a sen to 28 sen.
This article appeared in The Edge Financial Daily, July 8, 2010.
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