Global Chip Sales Hit $255.6 Billion in 2007

by Semiconductor Industry Association

CHIP SALES RISE FOR SIXTH CONSECUTIVE YEAR

San Jose, CA – February 1, 2008 – The Semiconductor Industry Association (SIA) today reported that global sales of semiconductors grew for the sixth-consecutive year, reaching a record $255.6 billion in 2007, an increase of 3.2 percent from the $247.7 billion reported in 2006. Worldwide sales in December were $22.3 billion, an increase of 2.5 percent compared to the $21.7 billion reported in December 2006. December 2007 sales declined by 3.6 percent from the immediate-prior month when sales were $23.1 billion. The modest sequential decline in December reflected normal seasonal patterns. Worldwide sales in the fourth quarter of 2007 were $66.8 billion, an increase of 2.5 percent over fourth-quarter 2006 sales of $65.2 billion.

“The major drivers of demand for semiconductors – personal computers, mobile handsets, and consumer electronics – remained strong in 2007,” said SIA President George Scalise. Shipments of personal computers, which account for approximately 40 percent all semiconductor consumption, grew by 13.8 percent and will grow by 12.2 percent in 2008, according to JPMorgan. Mobile PC unit sales grew 32.2 percent while desktop unit sales grew by 4.1 percent. According to JPMorgan, cell phone unit shipments grew by 20 percent to nearly 1.2 billion units in 2007. Current forecasts project 10 to 15 percent growth in unit shipments in 2008.

“Traditional consumer electronics are also experiencing healthy growth,” Scalise continued. “MP3/PMP player unit sales continue to grow at nearly 20 percent a year. LCD TV units grew by more than 50 percent, and digital camera units grew by 20 percent.

“The memory sector reflected the strong pricing pressures that prevailed throughout 2007,” Scalise continued. Average selling prices (ASPs) for both DRAMs and NAND flash declined precipitously through the year. Total industry sales, excluding memory products, were up by 4.5 percent year-on-year. Total bit shipments for DRAMs nearly doubled in 2007, but total revenues declined by 7.4 percent due to a decline of more than 39 percent in ASPs. NAND flash revenues were up 26 percent but unit shipments grew even faster at nearly 46 percent, while ASPs declined by 13.7 percent.

“Industry revenue figures tend to mask the growing pervasiveness and economic contributions of semiconductors,” Scalise said. “The most dramatic example of how advances in chip technology are benefiting consumers is the enormous increase in performance of a typical PC system coupled with a steep decline in prices, primarily driven by semiconductors that are faster, smaller, and cheaper every year. The typical desktop system of 2007 was at least 100 times more powerful than the typical system of 1997 but cost only about one-third as much — $630 in 2007 compared to $1,833 in 1997. Rapidly declining prices coupled with increases in performance and functionality provide consumers with additional computing power at lower prices resulting in higher productivity.

“The past year was another good year for the global semiconductor industry, despite concerns about steep increases in energy costs and the sub-prime mortgage problem. Based on the outlook for key demand drivers, we believe our forecast for 7.7 percent industry growth for 2008 is realistic,” 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 233,000 people. More information about the SIA can be found at www.sia-online.org.

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