Europe's exposure to the weak telecommunications market contributed to its poor semiconductor sales in May and could result in the region's top chipmaker missing its second quarter revenue forecast, according to analysts.
Total global semiconductor sales rose 10% in May, to $12.5 billion from $11.4 billion in May of 2002 and up a stronger-than-expected 2% from $12.3 billion in April, the Semiconductor Industry Association said, in a report.
But while all other regions recorded modest sales increases, the European market declined 3%, to $2.45 billion from $2.53 billion the prior month due to weak wireless handset sales as well as persistent problems in the wireline equipment sector.
"May's global semiconductor sales data highlighted a large discrepancy between the performance of Europe versus the other global regions," said Steve Woolf, an analyst at Commerzbank Securities, London. "We believe the cause of this underperformance lies in Europe's hgh reliance on the telecommunications market as a source of revenues relative to the rest of the world."
Woolf said Europe's poor semiconductor sales in May could hurt companies like STMicroelectronics especially since earlier revenue warnings from Advanced Micro Devices, Motorola, Nokia, and Texas Instruments imply the wireless sector could have seen sluggish growth in the second half.