Semiconductor Sales Boosted By PC, Cell Phone Market Growth

Chip sales overall would have been higher, if not for the continued decline in DRAMs and NAND flash memory prices, the Semiconductor Industry Association said.
Global semiconductor sales rose by 7.6% in July, driven primarily by growing sales in consumer electronics, personal computers and mobile phones, an industry group said Tuesday.

Semiconductor sales reached $22.2 billion, compared to $20.6 billion in July 2007, the Semiconductor Industry Association said. Sales increased 2.8% from June, when revenues reached $21.6 billion.

Year-to-date sales through July were $148.3 billion, an increase of 5% from the same period last year when sales were $141.3 billion.

The SIA attributed the growth in the market to rising sales of consumer electronics, PCs and cell phones, which account for about 80% of chip demand. In the consumer electronics market, sales of LCD TVs are expected to increase by 32% this year, whiles sales of digital set top boxes and digital still cameras are expected to rise by about 20% each.

"Taking into account PC unit growth of about 13% and cell phone growth of over 10%, we are enjoying the benefits of the strong 3.3% second quarter GDP (gross domestic product) growth in the U.S. and continued strength in world markets” SIA President George Scalise said in a statement.

In chip manufacturing, 300mm wafers accounted for the largest share of manufacturing capacity for the first time, the SIA said. The large wafers accounted for 44% of total capacity in July and 47% of total silicon processed. In addition, overall capacity utilization remained high at 89%, with leading edge manufacturers above 95%.

Chip sales overall would have been higher, if not for the continued decline in DRAMs and NAND flash memory prices. Excluding those products, semiconductors sales would have increased by 11.6% year-to-year and 3.2% month-to-month, according to the SIA.

Nevertheless, the demand for memory is expected to continue to increase in PCs and cell phones.

"According to (memory maker) Micron Technology, the DRAM bit content of the average PC in 2008 will increase by 56%, while the NAND flash content for the average cell phone will grow by 178%," Scalise said.

Meanwhile, the strength of the consumer electronics market is showing some sign of weakness. Manufacturers gathered in Berlin for the IFA electronics fair, which runs through Wednesday, told Reuters news agency that they are bracing for slower growth in the second half of this year and in 2009.

The reason for the anticipated slowdown in consumer electronics is the weakening global economy, higher oil prices and the sub-prime mortgage crisis in the United States.