Chip sales revenues up in first quarter

By Jim Carbone -- Purchasing, 5/21/2008 10:29:00 AM

Global sales of semiconductors increased 3.8% in the first quarter to $63.4 billion from $61.1 billion in the first quarter of 2007 but declined 5.1% from $66.8 billion in the fourth quarter of 2007, the Semiconductor Industry Associations reports. The SIA says the decline reflects a normal seasonal decline from the historically strong fourth quarter. Key point: “Weakness in memory revenue as a result of rapid price erosion masks the overall strength of semiconductor sales,” says SIA President George Scalise. “Excluding memory products, total semiconductor sales increased by a very healthy 11% year-on-year.”

Scalise says chip revenue was buoyed by growing consumer purchases of electronic products in world markets. Personal computer unit sales grew by 12% in the first quarter, reaching 71.1 million units, with strong sales outside the U.S. Strength in the PC market was reflected in sales of microprocessors, which increased by 13.4% year-on-year.

Average prices for microprocessors declined by a modest 3.5% over the past year, while units were up by 17.4% Personal computers are the largest single end market for semiconductors. Dynamic random access memory (DRAM) prices continued to be under pressure despite healthy growth in bit demand; in fact, DRAM sales revenues declined by 37.4% year-on-year despite a 30.6% increase in unit shipments.

DRAM prices declined on average by 52% when not taking product mix into account. According to Micron Technology, 512Mb DRAM, prices declined 73% year-on-year. Total DRAM bit shipments are expected to grow by 56% in 2008, according JP Morgan Securities.
Also see: Semiconductor revenue growth slows