First-Quarter Semiconductor Sales Show 3.8 Percent Year-on-Year Gain

by Semiconductor Industry Association

SALES GROW BY 3.4 PERCENT FROM FEBRUARY

SAN JOSE, CA – May 1, 2008 – Worldwide sales of semiconductors of $63.4 billion for the first quarter of 2008 were 3.8 percent higher than the $61.1 billion reported for the first quarter of 2007, the Semiconductor Industry Association (SIA) reported today. March sales of $21.1 billion were 3.4 percent higher than the $20.5 billion reported for February 2008. Sales declined by 5.1 percent in the first quarter of 2008 compared to the $66.8 billion for the fourth quarter of 2007. SIA said the decline reflects a normal seasonal decline from the historically strong fourth quarter.

“Weakness in memory revenue as a result of rapid price erosion masks the overall strength of semiconductor sales,” said SIA President George Scalise. “Excluding memory products, total semiconductor sales increased by a very healthy 11 percent year-on-year.

“Sales were buoyed by growing consumer purchases of electronic products in world markets, more than offsetting the effects of a slowing U.S. economy. Although semiconductor sales in the U.S. grew more slowly than overall worldwide sales, revenues in the first quarter of the year still registered growth of 2.3 percent versus the 3.8 percent growth worldwide year-on-year.

“According to a new Gartner report, PC unit sales grew by 12 percent in the first quarter of 2008, reaching 71.1 million units, with strong sales outside the U.S. and slower sales in the U.S. The U.S. market now accounts for approximately 21 percent of worldwide PC demand – down from over 31 percent just five years ago. Strength in the PC market was reflected in sales of microprocessors, which increased by 13.4 percent year-on-year. Average selling prices (ASPs) for microprocessors declined by a modest 3.5 percent over the past year, while units were up by 17.4 percent.” Personal computers are the largest single end market for semiconductors.

DRAM prices continued to be under pressure despite healthy growth in bit demand. DRAM sales declined by 37.4 percent year-on-year despite a 30.6 percent increase in unit shipments. ASPs declined by 52 percent not taking product mix into account. According to Micron Technology, 512Mb DRAM, prices declined 73 percent year-on-year. Total DRAM bit shipments are expected to grow by 56 percent in 2008, according JP Morgan.

Sales of NAND flash memory revenue grew by 45.9 percent in the first quarter on unit shipments that increased almost 46 percent over last year. Prices remain under pressure. According to Micron, ASPs for 8Gb NAND were down 70 percent from March 2007. SIA noted that NAND flash is widely used in cell phones, MP3 players, digital cameras and other hand-held electronic devices

Unit shipments of cell phones, which account for 20 percent of semiconductor sales, increased by 14.3 percent year-on-year.. “Emerging markets are driving sales of cell phones, reflecting the rapid expansion of consumer markets in these regions,” Scalise continued.

A recent report from Micron Technology underscores the rapid growth of semiconductor content in consumer electronic products. “Micron noted that the memory capacity of a typical PC has more than doubled from 2006 to 2008, to 1,817 MB on average this year,” said Scalise. “The company also reported that the DRAM content of a typical handset has tripled from 12 MB to 36 MB, while the NAND content of a handset has increased by more than 1,200 percent to 412 MB this year.

“Healthy sales of electronic products in world markets continue to drive demand for semiconductors. Global demand is in line with our expectations given current economic conditions, and we remain optimistic for the year,” Scalise concluded.

About the SIA Global Sales Report

The SIA Global Sales Report (GSR) is a three-month moving average of sales activity. The GSR is tabulated by the World Semiconductor Trade Statistics (WSTS) organization, which represents approximately 66 companies. The moving average is a mathematical smoothing technique that mitigates variations due to companies’ financial calendars.

About the SIA

The SIA is the leading voice for the semiconductor industry and has represented U.S. semiconductor companies since 1977. Collectively, the chip industry employs a domestic workforce of 216,000 people. More information about the SIA can be found at www.sia-online.org.

For more information:
Semiconductor Industry Association
John Greenagelor Anne Craib
408-436-6600
mailbox@sia-online.org