Apr. 6--Worldwide sales of semiconductors continued to show weakness in February, but the industry's leading business association suggests the downward pressure may be subsiding.

Global chip sales totaled $14.2 billion in February, a decline of 30.4 percent compared with February 2008 sales of $20.3 billion, the Semiconductor Industry Association (SIA) reported Friday. Sales declined by 7.6 percent from January's $15.3 billion. "The global semiconductor industry is going through one of the steepest corrections in its history," said George Scalise, SIA president.

While it would be premature to conclude that the sales decline has hit bottom, there are some indications that the rate of decline has moderated from last year's final quarter, he said.

Chipmaking and related businesses play a key role in Clark County's manufacturing sector, including companies such as WaferTech and Linear Technology in Camas and SEH America in Vancouver.

In a recent financial report, executives at Taiwan Semiconductor Manufacturing, which owns WaferTech, said the company's global net sales for February were down 7.5 percent from January and down 59.2 percent compared with February 2008.

However, TSMC expected first-quarter business to be better than the company's previous guidance from January, said Lora Ho, vice president and CFO of TSMC. Primarily due to quick orders from customers, especially from the mainland Chinese market, and a stronger U.S. dollar, TSMC now expects first-quarter revenue to be higher than the previous expectation.

"TSMC's expectation for first-quarter gross profit margin is now between 14 percent and 16 percent, and the company's operating profit margin is expected to be between negative 2 percent and zero, compared with the previous guidance of 1 percent to 5 percent. TSMC expects to lose between 19 percent and 15 percent in operating profit during the quarter, which ended March 31.

WaferTech, which employs about 1,000 workers, has implemented furloughs and production cuts to address the chip market downturn. Similar programs are in place at other area chip-related businesses.

The SIA's most recent surveys show that the industry responded quickly to the changing market environment by curtailing production and reducing inventory as demand slowed. Foundry manufacturers such as TSMC have recently reported slight improvements in factory utilization rates, albeit at levels well below those of a year ago, SIA's Scalise said.

"Demand for semiconductors is likely to continue well below 2008 levels for the next few quarters, with a gradual recovery to follow as the global economy recovers," Scalise concluded.

New TSMC products

Meanwhile, TSMC, which counts Texas Instruments and Nvidia among its major clients, has been driving process technology to smaller and smaller dimensions for such next-generation electronics devices as mobile phones and game consoles. These power chips are in the sub-nanometer category. A nanometer is one-billionth of a meter. The smaller circuitry allows the design of more powerful chips for more complex devices, and the squeezing of more circuits onto a single chip also increases chip yield per wafer, boosting efficiency, said TSMC marketers.

TSMC has raised its first-quarter sales and margin forecasts due to rush orders from China, indicating a trend of falling sales that began six months ago had hit bottom. Some of Taiwan's tech companies have been enjoying rush orders from China as electronics firms restock inventory after large cutbacks in production previously.

SIA has represented U.S. semiconductor companies since 1977. Collectively, the chip industry employs a domestic work force of approximately 200,000 people. The semiconductor industry is America's second-largest exporting industry.

Julia Anderson is The Columbian business editor. She writes about high-tech.

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