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Chip sales up despite weak June

Semiconductor sales post solid gains in the second quarter, though revenue slipped in June, according to a new industry report.

Chip sales posted solid gains in the second quarter, though revenue slipped in June, according an industry report released Friday.

The Semiconductor Industry Association (SIA) said second-quarter sales were up 5.8 percent from the first quarter. Sales reached $11.35 billion in the quarter, which ended June 30, fueled by wireless and consumer electronics.

Asia led the way with strong chip sales because of strength in consumer electronics and outsourcing. Worldwide revenue from flash memory, digital signal processors and application-specific products grew at double-digit rates for the June quarter.

Sales for June, however, were down 0.2 percent from May. Sequential sales fell 2.4 percent in the Americas, were down 4.1 percent in Europe and rose slightly in the Asia Pacific region, excluding Japan. It was a good June for Japan, which showed a sales gain of 5.4 percent.

For the June quarter, chip sales were down 1 percent in the Americas, compared with the previous quarter. They dropped 5 percent in Europe, jumped 16.3 percent in Japan and rose 11 percent in the Asia Pacific region.

Chip sales in the Americas were hurt by a sluggish PC market and turmoil in the telecommunications sector. That weakness has spilled over to Europe, the SIA said.

Weak sales in June have been well documented by the leading chip companies. Intel said business dropped off in June when it reported second-quarter results. And other PC manufacturers have issued warnings.

On Thursday, National Semiconductor projected flat sales for its fiscal first quarter ending Aug. 25. The company had been projecting sales growth of 6 percent to 8 percent.

National Semi said sales in June were slower than expected for PC products and related peripherals. Weekly sales have improved in July and are now more consistent with original expectations, the company said.

The SIA said it is sticking with its view that there is a chip recovery under way. So far this year, sales are down 1.6 percent from the first six months of last year. But year-over-year sales are still expected to increase 3 percent in 2002, with growth jumping to the 23.2 percent in 2003.

Analysts said the chip sector is still bouncing along the bottom.

"The June data essentially tells us that unit growth improved while pricing continued to be extremely competitive, in line with what companies reported throughout July and consistent with our channel checks," Bear Stearns analyst Charles Boucher said in a research note.