Petaling Jaya: Bleak outlook for M'sian semiconductor industry

TA Securities Holdings Bhd analyst Hafriz Hezry said the outlook for the industry this year would be "cautious" due to the slowdown in the US economy, the main growth driver for the world's semiconductor sales.

"If you look at the January sales figures for the past three years, this January was the worst. Even the month-on-month (December-to-January) figures were much weaker than that in the similar period in the previous three years," he added.

Hafriz said first-quarter figures in the industry were traditionally weaker but added that the latter part of this year would not offer much comfort in terms of revenue growth either.

George Scalise, president of US-based Semiconductor Industry Association, said in a report yesterday (March 4) that worldwide sales of semiconductors increased nominally by 0.03 per cent to US$21.5 billion from January 2007 while excluding memory products, semiconductor sales were up 8.1 per cent year-on-year.

He said sales declined by 3.6 per cent to $22.3 billion on a month-on-month basis compared with last December.

"Virtually all product lines and all geographic markets experienced slightly lower sales in January," Scalise said, adding that unit shipments of DRAMs and NAND flash grew modestly in January.

"Even with healthy demand from important end-markets, however, a very competitive environment resulted in price pressures for these products, which in turn led to continued erosion in average selling prices."

The report stated that unit shipments for personal computers (PCs) and cellular handsets were in line with expectations in January, with analysts projecting unit growth of 12 per cent for PCs and between 12 per cent and 15 per cent for cellular handsets this year. PCs and cell phones make up 60 per cent of worldwide industry sales.

Malaysian American Electronics Industry (MAEI) chairman Datuk SH Wong said it was still too early to predict what would be the impact on the local semiconductor industry. MAEI is a committee of the American Malaysian Chamber of Commerce.

"There'll definitely be an impact due to the US economic slowdown but we can only tell from the performance in the second half of the year," he told The Star.

Wong said there would be unit sales growth, barring any major issue that might crop up in the US although revenue growth was harder to predict.

By Fintan Ng

The Star

Publication Date: 05-03-2008