SAN JOSE - January chip sales were $18.3 billion worldwide, 0.5% below December sales but 17.5% higher than January 2004 sales, the SIA reported today. SIA pointed that January is usually a weak month for chip sales following the typically strong holiday season.

"The modest sequential sales decline is an encouraging sign," said SIA president George Scalise, in a statement. "January is historically one of the weakest months of the year for the microchip industry. We are encouraged by recent signs of strength in the overall U.S. economy, as evidenced by the 3.8% growth in GDP in the fourth quarter.

Dan Hutcheson of VLSI Research has noted that when GDP grows by more than 3% ,semiconductor sales have shown healthy growth except when there are excesses of inventory or production capacity. At the present time, neither production capacity nor inventory excess is a problem.

"The excess inventories that slowed growth in the second half of 2004 have been largely depleted," Scalise said. "According to iSuppli, excess inventories declined from $1.6 billion at the end of the third quarter to $1 billion at year end. In some market segments, inventories are now below target levels, thus we are confident that inventory issues will not be a significant factor in semiconductor sales beyond the first quarter."

Factory utilization continued to decline, as expected, throughout the second half of 2004. Overall utilization was at 86% in the fourth quarter, and leading-edge capacity utilization was at 93%. Industry capital spending increased to approximately $47 billion - roughly 22% of total sales - in 2004.

"In a year of record industry sales, this level of capital spending is in line with capacity needs going forward and should not lead to either excess capacity or severe price pressures," said Scalise.

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Tempe, AZ - The manufacturing sector grew in February for the 21st consecutive month, although at a slower rate. New orders and production slowed, while backlogs remained steady, said the Institute for Supply Management (www.ism.ws).

"Price increases and shortages are becoming less of a problem," ISM chairman Norbert Ore said. "Exports and imports remain strong. The recent trend of inventory growth reversed direction during February; this reduces possible concerns about involuntary inventory build. Customers' inventories declined slightly, reinforcing the probability that inventories are not yet a concern."

The PMI measure of economic activity fell 1.1 points sequentially, to 55.3%. New orders fell 0.7 points to 55.8%. Production dropped 1.1 points, reversing January's gains. Employment was down 0.7 points, to 57.4%.

Electronic Components and Equipment, and Industrial and Commercial Equipment and Computers were among the sectors reporting growth.

 

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SAN JOSE -- Tessera Technologies has filed a patent infringement suit against a pair of leading chip makers.

The filing, which came in U.S. District Court, charges Infineon Technologies and Micron Technology with illegal use of Tessera-patented designs for chip packages that contain memory and other semiconductor devices.

A Tessera spokesman said the company would provide no further details at this time.

Tessera licenses its package designs to other semiconductor makers.