Last week, the Semiconductor Industry Association (SIA) announced that worldwide semiconductor sales dropped to $17.4 billion from $22.3 billion in December, a drop of 22%. Compared to November, December's sales were 16.6% lower. For comparison, November 2007 chip sales fell only 10%. SIA President George Scalise noted that weakened demand for automotive products, personal computers, cell phones, and corporate information technology products. However, Scalise said the largest revenue declines were "in the memory sector where price pressure more than offset significant growth in total bit shipments."
The SIA head also blamed lowered demand on the global recession. What is most disconcerting is that the fourth quarter is generally a strong quarter -- and it was a tad weak.
The Semiconductor HOLDRS Trust (NYSE: SMH) is in the process of rebounding, but it has been a slow process. During November 2008, SMH hit a low in the $16 region -- but it is trying to trek higher. The bounce has hit some tough sledding in the $18 region, but the exchange-traded fund (ETF) has some room to run before it meets its next potential trendline resistance. The shares are north of their 10- and 20-week moving averages, with the 50-week well overhead in the upper reaches of the $14 region.
If the semiconductor sector can weather this news and the current economic turmoil, things could get interesting.
The Semiconductor HOLDRS Trust (NYSE: SMH) is in the process of rebounding, but it has been a slow process. During November 2008, SMH hit a low in the $16 region -- but it is trying to trek higher. The bounce has hit some tough sledding in the $18 region, but the exchange-traded fund (ETF) has some room to run before it meets its next potential trendline resistance. The shares are north of their 10- and 20-week moving averages, with the 50-week well overhead in the upper reaches of the $14 region.
If the semiconductor sector can weather this news and the current economic turmoil, things could get interesting.
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