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Is the tech industry bouncing back?

Semiconductor sales have been increasing of late — a possible barometer of a brighter future for the wider industry.

A 12-inch wafer is displayed at Taiwan Semiconductor Manufacturing Company in Xinchu, Jan. 9, 2007. (Richard Chung/Reuters)

SAN FRANCISCO — The global semiconductor market has been enjoying a mild rebound since March, offering hope that the wider technology industry is also on the course to recovery.

Observers hope this budding recovery, fueled by a demand for electronic components in China, signals the end of the semiconductor industry slump brought on by the global financial crisis.

Most chips go into consumer devices ranging from smart phones to laptops and televisions to automobiles. That makes semiconductor sales dependent upon factors like consumer confidence and holiday spending.

The semiconductor market has seen a series of month-to-month sales increases since March, accompanied by a firming of chip prices.

“We're definitely in a period of recovery which is good news, but we are bouncing back off of a very low sales base,” said semiconductor analyst Jim McGregor with the Arizona market research firm In-Stat. “What everybody's trying to figure out now is whether it's sustainable.” Since electronics makers order chips well in advance of selling their finished goods, semiconductor sales also serve as something of a barometer of how manufacturers view the consumer marketplace.

“The big questions looking forward are macroeconomic,” said semiconductor analyst Jim Handy, with the California market research firm Objective Analysis. “If we have another wave of the financial crisis or some loss of confidence, all bets are off and the chip industry could head back down.”

That caveat aside, observers are cautiously optimistic that the semiconductor industry has pulled out a worse dip than the collapse that occurred after the technology bubble burst earlier in the decade.

“The current downturn is much sharper than in 2001,” said the Brussels-based Organization for Economic Cooperation and Development in a recent analysis of the semiconductor industry.

“A modest month on month upturn since March 2009 suggests that demand is beginning to stabilize, although at substantially lower levels than one year earlier,” OECD officials said, suggesting that the global technology industry is “poised to rebound.”

http://www.globalpost.com/dispatch/technology/090831/chip-industry-stabilizes