Chip Sales Fall 25% in March From a Year Ago

Worldwide computer chip sales fell 25% in March from a year ago, the smallest decline since last June, thanks to a resumption of sales to personal computer makers. But compared with February, chip sales rose 7.2%, the highest month-to-month increase in 16 years.

Sales totaled $10.75 billion in March, down from $14.41 billion in March 2001 but up from $10.03 billion in February, the Semiconductor Industry Assn. said Thursday.

Chip makers such as Intel Corp., Texas Instruments Inc. and Samsung Electronics Co. cut production and worked off inventories last year amid the industry’s worst year on record. Although signs are beginning to emerge of a recovery in chip demand, investors said they’re still not sure whether the trend will continue.

The industry “is bottoming out, but I’m not sure if demand for final products [such as PCs] is strong enough to sustain a rally in chip sales,” said Nobuaki Murayama, who helps manage $462 million in equities at Cigna International Investment Advisors Co.

First-quarter sales rose 5.6% to $32.25 billion from the fourth quarter last year, thanks to a record 82.4% revenue surge for dynamic random-access memory chips, SIA said.

DRAM prices plummeted to below the cost of production last year after PC sales slumped, resulting in huge losses among memory chip makers. DRAMs are the main memory in personal computers and other consumer electronics.

Japan’s five largest chip makers racked up losses of $11.6 billion last fiscal year, and South Korea’s Hynix Semiconductor Inc., the world’s third-largest memory chip maker, turned to creditors for two multibillion-dollar bailouts to remain alive.

“The March quarter sales are another sign that the industry is rebuilding from 2001, with growth in all major geographic regions except Japan, which was flat,” said SIA President George Scalise. “The DRAM sales are a result of increased demand and price increases from the depressed levels of 2001.”