SIA: January chip sales up year over year, but down from December

By Suzanne Deffree -- Electronic News, 3/5/2007

Worldwide sales of semiconductors hit $21.47 billion in January, 9.2 percent higher than January 2006 when sales were $19.66 billion, the Semiconductor Industry Association (SIA) reported today.

However, January sales reflected an expected seasonal decline of 1.2 percent from the $21.74 billion reported in December 2006. December had also recorded sequential declines on November 2006, a record month, SIA data showed.

“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 in a statement. “The semiconductor industry continues to benefit from consumer confidence which has been buoyed by recent gains in both personal and disposable income.”

Scalise continued to say that final numbers for cell phone sales in 2006 show that shipments reached nearly 1.02 billion units, exceeding earlier estimates. “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.”

Further, he said that PC sales maintain large benefits from the steady decline in prices of semiconductors achieved through advances in technology. According to SIA, 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,” Scalise said. “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.

Backing previous statements that semiconductor sales will reach $321 billion in 2009, largely based on consumer purchases, Scalise continued to note that consumer electronics were strong last year.

“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,” he concluded.