SAN JOSE, Sept. 2 - July worldwide sales of semiconductors rose 1% sequentially to $18 billion, with all regions taking hits except Europe, the Semiconductor Industry Association reported today. In a statement, the SIA callled the slower growth rate "not unexpected."

"The latest numbers reflect a slower growth rate for worldwide sales of semiconductors as previously projected," said SIA president George Scalise. "A combination of factors - consumer uncertainty, inventory accumulation in key sectors, and seasonal issues in some markets - resulted in modest sequential sales growth from June.

Nevertheless, year-on-year sales were up 37.9% as demand for ICs continues to rage worldwide. The data are based on a three-month moving average of sales activity by 66 reporting semiconductor firms.  

SIA predicted a strong finish to 2004. SIA guided for third-quarter sequential growth of 4 to 6%. "The industry remains on track for year-on-year growth of approximately 28% and record sales of $214 billion," Scalise said, citing the strong U.S. economy for creating favorable conditions for sales of PCs, autos, and consumer electronics.

"If these end-markets follow normal seasonal patterns, we expect to see solid growth rates for the semiconductor industry through the remainder of the year," Scalise said.

Inventory levels remain considerably lower than comparable levels in summer 2000. "There are also indications that consumer concerns over issues such as oil prices, the U.S. elections, and geopolitical developments are affecting household spending patterns.

Sales growth rates slowed sequentially in all regions except Europe. According to VLSI Research, capacity utilization is forecasted to decline slightly from 95% in the second quarter to 93% in the third. 

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