Chip Industry Calls On Congress To Act On Financial Crisis

Sales of PCs and portable gadgets could be hurt dramatically if people pulled back on spending out of fear of a weakening economy, Semiconductor Industry Association leaders said.

Antone Gonsalves, Contributor

October 2, 2008

2 Min Read

The semiconductor industry on Thursday called on Congress to move quickly in passing legislation that promises to restore stability to the U.S. financial system, which has been devastated by the lending practices of Wall Street during the real estate boom.

In reporting strong growth in chip sales in August, the Semiconductor Industry Association warned that more than half of those sales came from the purchase of consumer electronics, a market that could be hurt dramatically if people pulled back on spending out of fear of a weakening economy.

"Consumer confidence is essential to the entire supply chain of the global technology sector; thus it is essential for Congress to move swiftly to restore stability to the U.S. financial system," SIA president George Scalise said in a statement.

The affect of the U.S. financial crisis, which has led to plummeting home prices and a severe credit crunch, has already had an impact in some consumer markets. U.S. automakers reported steep declines in sales in September.

As of August, however, semiconductor sales were strong, buoyed by healthy sales of personal computers and mobile phones, which offset dropping prices for DRAMs and NAND flash memory. DRAM, dynamic random access memory, is commonly used in PCs, and NAND flash is used in storage devices for digital cameras, cellular phones and other consumer electronics.

Overall, semiconductor sales in August grew by 5.5% compared with the same month a year ago to $22.7 billion, according to the SIA. Excluding memory products, industry sales were up 11.4%.

Year-to-date sales were up by 4.5% to $170.2 billion, compared with $162.9 billion from January to August last year, the SIA said. The year-to-date pace is a tad more than SIA's forecast of 4.3% for 2008.

Quoting a recent Credit Suisse report, the SIA said PC unit sales are expected to increase more than 13% this year. Unit sales in August grew by 9.1% year to year in August, a modest slowdown from July, the SIA said. Unit sales of mobile phones remained strong, particularly in emerging markets. Handset unit sales are forecast to rise by about 10% this year.

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