"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. 

TEMPE, AZ, Sept. 2 - The rate of growth in the manufacturing sector slowed in August but new orders and production remained strong. Manufacturing grew for the 15th consecutive month, said the Institute for Supply Management, based on its monthly poll of the supply chain.

The PMI, a leading measure of economic activity, was 59%, down 3 points and breaking a string of nine straight months above the 60% level. Still, the PMI was above the benchmark 50% level for the 15h straight month. New orders fell 3.5 points and production dropped 6.6 points.

Respondents focused on energy costs, price inflation in basic materials and slowing sales growth. "While the near-term outlook remains positive, both the inventories and customers' inventories indexes show signs of inventory building," ISM chairman Norbert Ore said. "Such a build may be justified if it is to meet additional sales demand, and if new orders and production remain strong."

Prices manufacturers pay were higher, driven by customer demand and energy costs. Customer inventories remain "too low," ISM said, although the rate of decline decelerated significantly during August. Backlogs rose, as did new export orders and imports.

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

                                                April                       May                        June                      July                        August

PMI                                           62.4                        62.8                 61.1                 62.0                  59.0

New orders                             65.0                        62.8                 60.0                 64.7                  61.2

Production                               67.0                        64.8                 63.2                 66.1                  59.5

Inventories                               44.8                        49.3                        51.1                        49.9                         51.7

Customer inventories               40.5                        37.0                        39.0                        37.5                        45.5

Backlogs                                  66.5                        63.0                        58.5                        58.0                         55.0