Chip manufacturers are beginning to feel the pinch, as personal-computer sales slow down.

The Semiconductor Industry Association (SIA) has released figures revealing that worldwide semiconductor sales dropped 5.7 per cent in January 2001 compared to December 2000.

The 5.7 per cent fall has cost the manufacturers just under one billion dollars. Worldwide sales were worth $16.87 billion in January, compared to $17.89 billion in December.

But sales compared to January 2000 actually increased, with the 2001 figure up by 13.7 per cent from $14.84 billion. However, decelerating month-to-month sales were seen in each semiconductor sector in every geographic area, said the SIA. The drop is due to slowing demand and inventory build-up, they said.

The Asia-Pacific region has seen a 7.9 per cent decline, followed by the Americas with a 5.8 per cent. The drop in Europe was significantly lower, with a 2.7 per cent slump in sales reported for the region.

Inventory is expected to be back at normal levels by the end of the third quarter, said SIA President George Scalise. The organization forecasts a rise in product demand later in the year.

Last month, Apple partner Motorola announced plans to cut 4,000 jobs in its semiconductor division over the next year.