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Hanover Township, Pa., Company Contributes to Growth of Semiconductor Industry

Posted on: Monday, 6 March 2006, 12:00 CST

By Jeanne Bonner, The Morning Call, Allentown, Pa.

Mar. 3--Worldwide sales of semiconductors rose 7 percent in January to $19.6 billion, compared to the same period last year.

Strong sales of consumer electronics and a lack of accumulating inventory boosted the industry's results in January, said the Semiconductor Industry Association, which released the statistics Thursday.

January chip sales were down 1.5 percent from December. SIA said semiconductor sales in January typically decline 2.2 percent on average following a strong fourth quarter.

"The new year got off to a good start for the global semiconductor industry with strong year-on-year growth in a historically weak month," SIA President George Scalise said in a news release. "The industry entered the new year in a healthy condition."

The monthly results are the first since the industry reported a record year for 2005, with chip sales rising 6.8 percent to $227.5 billion. This year, the association expects chips sales to rise 7.9 percent to $245 billion. It also has predicted the industry will grow at a compound annual rate of 10 percent each year in the future.

Semiconductor sales are an important barometer of the economy because chips are used in an array of products, from cars to computers to cell phones.

Sales of consumer electronics have continued to take a larger share of total chip consumption. Personal computers, however, remain the largest market segment.

Agere Systems of Hanover Township, Lehigh County, is the only major local chip company. In January, it reported it had narrowed its first-quarter loss to $19 million, from a loss of $67 million in the same quarter a year ago. The company, which develops chips for cell phones and hard-disk drives, named a new chief executive officer in October. Richard Clemmer, who has been on Agere's board since 2002, wasted no time changing virtually all top executives.

Agere will improve profitability this year by investing in product lines that are growing, Clemmer has said, rather than continuing to pour money into divisions whose sales have been flagging. Since Clemmer took over as CEO, Agere's stock has risen about 50 percent.

Agere is among the Lehigh Valley's top 10 employers, and in 2004, was the 28th largest chip company in the world.

The Semiconductor Industry Association's monthly figures are based on a three-month moving average of sales activity. The San Jose, Calif., association uses an average to reduce variations that arise from the various financial calendars used by its member companies.

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AGR,

Source: The Morning Call, Allentown, Pennsylvania

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