Worldwide Chip Sales Grew by 2.1 Percent in First Half of 2007

by Semiconductor Industry Association

SAN JOSE, Calif. – August 3, 2007-

Worldwide sales of semiconductors grew to $121 billion in the first half of 2007, an increase of 2 percent from the $118.4 billion reported for the first half of 2006, the Semiconductor Industry Association (SIA) reported today. Second-quarter sales of $59.9 billion declined by 2 percent from the $61.1 billion reported in the first quarter of 2007. Sales in June 2007 amounted to $20 billion, a decline of 1.7 percent from the $20.3 billion reported in May.

“Continuing rapid price attrition in several important market segments held growth in total semiconductor sales to just over 2 percent in the first half of 2007 despite increases in total unit shipments of almost 7 percent,” said SIA President George Scalise. “End unit demand in major industry drivers, including personal computers and cell phones is growing in line with forecasts. Together, these two market sectors drive about 60 percent of semiconductor demand,” Scalise added.

“Sales of personal computers were strong in the second quarter, with unit growth now projected at more than 10 percent for 2007,” Scalise continued. “PC buyers are continuing to reap the benefits of declining prices for microprocessors and DRAMs, which enable PC manufacturers to offer very powerful systems at attractive prices. The average price of a desktop system has fallen to around $700, while the memory content of these machines has increased by approximately 50 percent over last year.”

”Unit shipments of cell phones are on track for 10 percent growth in 2007,” Scalise noted. Unit sales of DSP chips, key components of mobile phones, grew by 3 percent in the first half, an indication that there may have been excess inventory in the supply chain at the start of the year.

“The major story for the chip industry for the first half of 2007 continues to be rapid price attrition,” said Scalise. “DRAM prices declined nearly 40 percent while unit shipments grew by almost 66 percent year on year,” Scalise continued. “The pattern was similar, if somewhat less dramatic, in the NAND flash segment, especially early in the year. NAND unit shipments grew by almost 40 percent compared to June of 2006 but ASPs declined by just over 15 percent. Recently NAND prices have been stabilizing, and the price decline in June was the smallest we’ve seen this year.”

SIA reported that sales of microprocessors declined by 3 percent sequentially but were up by more than 7 percent from June of 2006. Unit shipments of microprocessors were up by 19 percent for the first half of 2007 compared to the first half of 2006 while the rate of year-on-year price attrition in this segment has now fallen below 10 percent for the first time this year.

“The industry sales increase of 2.1% in the first half is slightly ahead of our June revised forecast calling for 2007 sales to increase 1.8 percent.

We expect that key end markets will grow in line with expectations through the remainder of the year, and that total semiconductor sales for 2007 will meet the revised forecast,” 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.

To view the data table and chart, click here

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