Chip sales decline globally for fifth month

Analysts see geopolitical uncertainty as a cause for semiconductor purchase delays. (Getty Images)

Global semiconductor sales rose to $33.1 billion in May, up nearly 2% from April, but were down 14.6% from May 2018.

Geopolitical uncertainty in all regions may be the chief cause, as buyers delay purchases.

The sales tally for May 2018 was $38.7 billion, or $5.6 billion better than May 2019’s $33.1 billion.  

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That was the fifth straight month of negative global sales growth on a year-to-year basis, according to Semiconductor Industry Association CEO John Neuffler.

Sales dropped year-to-year across all regions in May, hitting the Americas the worst, with a decline of nearly 28.6%. Japan was down 13.6%; Asia Pacific was down 12.6%; China was down 9.8%; and Europe was down 9%.

The sales data is compiled by the World Semiconductor Trade Statistics organization based on a three-month moving average. Analysts consider the data highly reliable.

Generally, chip sales have declined because of a combination of factors, including concerns over trade tariffs, the potential for wars and conflicts and other world-changing events.

“The decline is a combination of things. It’s a combination of geopolitical issues and a lot of uncertainty leading to delaying of product sales,” said Dan Mandell, an analyst at VDC Research, in an interview.

“Semiconductor sales are a part of the fight going on over the tariff news out of China,” he said. Last weekend, President Trump and China’s president called a truce on tariffs subject to more negotiations.

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“Whether the geopolitical weather changes leaves uncertainties for a lot of people,” Mandell added. “The economic weather could get better or worse.”

SIA ranks U.S. semiconductor exports as the fourth largest export behind airplanes, refined and crude oil.  About 45% of the world’s semiconductors are produced by U.S. chipmakers in an annual global market of roughly $500 billion. 

As such, the market for chips and chip sales is a major economic indicator. “Chips have a major economic influence on the countries that make them,” Mandell said.