Chip Sales Dipped in February but Could Still Exceed 2010 Forecasts

Computer chip, Semiconductor Industry Association sales report
Computer chip, Semiconductor Industry Association sales report

Semiconductor investors may be feeling a bit less stressed this morning, following the February release of the closely watched Semiconductor Industry Association (SIA) chip sales report. Despite a 1.3% sequential decline in worldwide chip sales to $22 billion in February, the SIA reaffirmed the possibility for better performance overall this year compared with its forecast in November.

"There are encouraging signs that the global economic recovery will continue, and we remain cautiously optimistic that there is upside potential for growth beyond our November forecast for 2010," George Scalise, SIA president, said in a statement.

In November, the SIA predicted 2010 would end with chip sales climbing 10.2% to $242.1 billion. The SIA uses a three-month moving average when calculating its monthly figures.

PCs and Cell Phones Lead the Way

"The February sales numbers reflect continued recovery of sales of semiconductors, with demand principally driven by growth in sales of electronic products in emerging economies," Scalise said. "Unit sales of the two leading demand drivers for semiconductors -- personal computers and cell phones -- are now projected to grow in the low- to mid-teens in 2010."

During February, chip sales grew 56.2% over the same month last year. But before investors get too excited, they should note that the year-over-year comparison bar was set extremely low due to the global economic meltdown last year, as Scalise pointed out.

Intel's (INTC) stock price was up 0.49% to $22.50 in pre-market trading, Advanced Micro Devices (AMD), rose 1.17% to $9.48, and National Semiconductor (NSM) was up 1.24% to $14.65. In another reflection of the sector's prospects, the Philadelphia Semiconductor Index has risen to 366.93 at the close on Thursday, up from approximately 240 a year ago.