January Chip Sales Up by 9.2 Percent from 2006

by Semiconductor Industry Association

Sales decline by 1.2 percent from December

SAN JOSE, Calif. – March 5, 2007

Worldwide sales of semiconductors of $21.47 billion in January were 9.2 percent higher than January 2006 when sales were $19.66 billion, the Semiconductor Industry Association (SIA) reported today. January sales reflected a seasonal decline of 1.2 percent from the $21.74 billion reported in December.

“January semiconductor sales reflected historical seasonal patterns, with strong year-on-year sales growth coupled with a modest sales sequential decline,” said SIA President George Scalise. “The semiconductor industry continues to benefit from consumer confidence which has been buoyed by recent gains in both personal and disposable income.

“Final numbers for cell phone sales in 2006 show that shipments reached nearly 1.02 billion units, exceeding earlier estimates,” Scalise continued. “Concerns about inventories in the previous quarter appear to have worked themselves out, and the forecast for unit growth in the range of 10 to 15 percent for 2007 appears to be realistic. The average semiconductor content of a cell phone is approximately $40 per unit, driving more than $40 billion of semiconductor demand.

“Purchasers of personal computers continue to reap large benefits from the steady decline in prices of semiconductors achieved through advances in technology,” Scalise continued. “The average price of both desktop and laptop computer systems declined by more than 9 percent in 2006, even as the speed and functionality of these systems was enhanced by more powerful chips.

“Sales of DRAMs led the industry both in total sales and in year-on-year growth in January. With $3.6 billion in sales in January, DRAM revenues were up 72 percent year-on-year and 2.3 percent sequentially. The introduction of the Microsoft Vista operating system, which requires substantial additional memory, may have contributed to the increase in demand.

“Sales of MP3 players and digital cameras, two other consumer products with high semiconductor content, remained strong in 2006. U.S. unit sales of both products grew by nearly 40 percent last year, driven by rapidly declining prices,” Scalise said.

ABOUT THE SIA GLOBAL SALES REPORT

The SIA’s 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.

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ABOUT THE SIA

The SIA is the leading voice for the semiconductor industry and has represented U.S semiconductor companies since 1977 and SIA member companies comprise more than 85% of the U.S. semiconductor industry. Collectively, the chip industry employs a domestic workforce of 232,000 people. More information about the SIA can be found at www.sia-online.org.

SIA CONTACT

John Greenagel
408-436-6600
mailbox@sia-online.org

Anne Craib
408-436-6600
mailbox@sia-online.org