Second Quarter 2006 Sales Up 9.4% Over 2005

by Semiconductor Industry Association

RESULTS REFLECT MIXED END PRODUCT MARKETS, BUT OUTLOOK REMAINS POSITIVE

SAN JOSE, Calif. – August 3, 2006– Worldwide sales of semiconductors totaled $19.6 billion in June, up over 9% from June 2005, the Semiconductor Industry Association (SIA) reported today. June sales figures bring second quarter 2006 sales to $58.9 billion, a decrease of 0.3% from the first quarter of this year, but a 9.4% increase over the same period last year.

These numbers bring total sales for the first half of the year to $118 billion, up 8.3% over the first half of 2005.

“The semiconductor sales numbers reported today reflect the mixed earnings results we have seen in the industry over the past few weeks,” said SIA President George Scalise. “Unit demand has remained strong this quarter, up about 5% across the industry. Strong competitive pressures that have reduced prices in some major product sectors are impacting revenues,” said Scalise.

Unit sales of PCs rose approximately 10% in the second quarter over the same period last year. Competitive pricing has affected average sales prices in this sector of the market. The average price of a laptop fell by more than 18% compared to second quarter of 2005.

“Communications applications grew at a very steady pace year over year – that market represents a quarter of total demand in the industry. Unit demand for cell phones in the quarter just ended was 235 million units and is expected to grow over 4% this quarter and at least 10% next quarter, with total cell phone demand this year nearing the 1 billion unit mark,” said Scalise.

“Despite the current uncertainties in the global economy, driven by geopolitical issues in the Middle East, higher gas prices at the pump and inflation fears, I remain confident that sales will reach record high levels this year as previously predicted,” said Scalise.

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.

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 225,000 people. More information about the SIA can be found at www.sia-online.org.