Worldwide Chip Sales Up 5.4 Percent in First Half of 2008

Business Wire, August 4, 2008

June Sales Rose by 8 Percent Year-on-Year

SAN JOSE, Calif. -- Global sales of semiconductors for the first half of 2008 grew to $127.5 billion, an increase of 5.4 percent over the first half of 2007 when sales were $121 billion, the Semiconductor Industry Association (SIA) reported today. June sales of $21.6 billion were up by 8 percent from the $20 billion reported for June 2007. June sales increased by 0.5 percent from May, when sales were $21.5 billion. Second-quarter sales of $64.7 billion increased by 3 percent over first-quarter sales of $62.8 billion. Thus far increased energy costs have had little impact on demand for electronic products that drive semiconductor demand.

"Continuing strength in international markets - coupled with healthy demand in the U.S. - helped drive higher worldwide sales of semiconductors in June," said SIA President George Scalise. "Key demand drivers for semiconductors - especially personal computers, which account for 40 percent of semiconductor sales, and mobile phones, which drive about 20 percent of demand - continued to show double-digit unit growth. JPMorgan recently revised upward its forecast for unit sales of personal computers to 13 percent, with sharp increases in sales of portable systems. Forecasts for unit sales growth of mobile handsets range from 10 to 12 percent for 2008.

"Emerging markets are a major factor in driving worldwide semiconductor sales," Scalise continued. "PC unit sales in emerging markets are expected to grow by 19 percent - more than double the growth rate in developed markets this year. In 2008, developing countries - with sales of over 153 million units - will account for half of worldwide PC sales. In mobile phones developing countries are expected to account for 66 percent of total worldwide unit sales of over 1.3 billion, up from 61 percent last year. The emergence of large middle-class populations in China, India, Eastern Europe, and Latin America has more than offset the effects of slower growth in the U.S. economy. We expect that demand for consumer electronic products in these new markets will continue to outpace growth in developed markets for the next several years."

"Inventory for the industry is in balance with minor excess in a few product sectors," Scalise noted.

SIA noted that total semiconductor sales in June, excluding memory products, grew by 12 percent year-on-year. Price attrition in memory products contributed to a 6 percent year-on-year decline in total memory sales despite sharply increased unit sales.

"Advances in semiconductor technology continue to deliver huge benefits to consumers, as semiconductor devices deliver higher performance and increased functionality at lower cost," said Scalise. "At the same time, rapid price declines for microchips tend to mask the real growth of the industry. The cost of 1 gigabit of DRAM has declined by 43 percent during the past year, while the price of 2 gigabits of NAND flash has declined by 61 percent in the last 12 months. Lower prices enable increased memory content in consumer devices. Micron estimates that the memory content of the average PC will increase at least 50 percent this year, while the memory content in the average cell phone will increase by more than 150 percent."

Scalise noted that during the past 10 years, the price of a typical desktop PC has declined by nearly two-thirds while performance and functionality have increased by a factor of more than a hundred. "The impact of advanced technology on energy efficiency is even more dramatic," Scalise said. "A recent independent study showed that computers have become nearly 3 million percent more energy-efficient over the past 30 years," 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.

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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. Collectively, the chip industry employs a domestic workforce of 216,000 people. More information about the SIA can be found at www.sia-online.org.