When there is an unexpected uptick in trading war salvos, some investors are going to wonder if many of the semiconductor and technology forecasts made in recent weeks are going to have much merit going forward. After all, many companies that reported better than expected earnings have seen their stocks get gutted in this latest market sell-off. Semiconductors are important because in many ways they can be a leading economic indicator of how things are going to shape up in the months ahead.
A fresh report from the Semiconductor Industry Association has shown that global sales of semiconductors reached $98.2 billion during the second quarter of 2019. While this was just a 0.3% gain from the first quarter of 2019, it was down 16.8% from the second quarter of 2018.
The Semiconductor Industry Association (SIA) also reported that global chip sales during the month of June were $32.7 billion, down 0.9% versus the prior month’s total of $33.0 billion and 16.8% lower than June 2018’s total of $39.3 billion.
To put 2019 into perspective with a global slowdown and a US/China trade war taking place, semiconductor-related sales during the first half of 2019 were down by 14.5% versus the first half of 2018.
Some regions are doing better than others when it comes to semiconductor sales around the globe. There was a month-to-month increase of 2.6% in Japan — versus a 1.5% drop in China and a 0.7% drop in Asia Pacific/All Other, The Americas saw a 0.7% decline in the monthly readings, while Europe saw a 2.6% decline.
The SIA also reported that the year-to-year basis showed that semiconductor related sales were down across all regional markets, as follows:
- Europe (-10.9%),
- Japan (-12.8%),
- China (-13.9%),
- Asia Pacific/All Other (-13.7%),
- and the Americas (-29.5%).
John Neuffer, president and CEO of the Semiconductor Industry Association, said of the June quarter-end report:
At the midpoint of 2019, the global semiconductor market remains in a period of decreased sales, with revenues through June lagging the mid-year totals from last year by nearly 15 percent. Year-to-year sales were down across all major regional markets and semiconductor product categories. One silver lining was that sales during the second quarter of 2019 narrowly outpaced sales during the first quarter.
Some analysts have already made their predictions ahead about what will be happening with chip-related sales ahead. This new report looks more at what has happened rather than what will happen, but it’s a pretty sharp decline when you look at these numbers on the annual figures. The only really good news here is that, assuming things get back on the right track, the bar is being set very low for annual gains in 2020 or future periods.