Global chip sales continue to decline as US-China trade war escalates

Worldwide semiconductor sales fell 16.8 per cent year on year to US$98.2 billion in the three months ended June 30

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The Trump administration’s proposed new round of tariffs on US$300 billion of trade with China will encompass virtually all information technology products, including laptops, smartphones, solid state drives, video game consoles, printers, televisions and displays – which are all enabled by semiconductors. Photo: AP

Li Taoin Shenzhen

Published: 7:00pm, 6 Aug 2019Updated: 10:46pm, 6 Aug 2019

Global sales of semiconductors – the tiny chips that drive nearly every modern technology, from flat-screen televisions and smartphones to electric cars and the internet itself – declined for the second consecutive quarter as trade tensions between the United States and China created industry uncertainty.

Worldwide chip sales reached US$98.2 billion in the three months ended June 30, down 16.8 per cent from US$117.9 billion a year earlier, according to data from the Semiconductor Industry Association (SIA), the trade body that represents US interests in chip manufacturing, design and research.

“At the midpoint of 2019, the global semiconductor market remains in a period of decreased sales, with revenues through June lagging the midyear totals from last year by nearly 15 per cent,” said John Neuffer, SIA president and chief executive, in a statement released on Monday. “Year-to-year sales were down across all major regional markets and semiconductor product categories.”

Chip sales in the first quarter dropped 13 per cent to US$96.8 billion from US$111.1 billion a year ago, according to the SIA.

The association’s latest quarterly industry data came days after US president Donald Trump vowed to unleash a new 10 per cent tariff on US$300 billion of Chinese goods as of September 1. Trump said in a series of tweets last Thursday that the levy would be imposed because the latest round of trade talks had not yielded sufficient concessions from Beijing.

China’s foreign ministry said that announcement violated the agreement reached between the two nations, following a summit between Trump and his Chinese counterpart Xi Jinping in late June when the US promised not to impose further tariffs. This week, China has allowed the yuan to fall further against the US dollar, prompting the US to label it a currency manipulator, further roiling markets and clouding the economic outlook.