Semiconductor market in stagnation

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Semiconductor market in stagnation

Chip sales are off to slow start, as semiconductor sales declined sequentially and were flat year-over-year during the first month of the year. Global sales of $22.49 billion were down 3.6% over the previous month and up 0.03% over January 2007.

“Virtually all product lines and all geographic markets experienced slightly lower sales in January,” said George Scalise, president of the Semiconductor Industry Association. “Unit shipments of DRAMs and NAND flash grew modestly in January. Even with healthy demand from important end markets, however, a very competitive environment resulted in price pressures for these products which in turn led to continued erosion in average selling prices. Excluding memory products, semiconductor sales were up by 8.1% year-on-year.”

Unit shipments of personal computers and cellular handsets were in line with expectations in January. Analysts are projecting unit growth of around 12% for PCs and 12 to 15 percent for cellular handsets in 2008. PCs and cell phones together account for approximately 60% of worldwide semiconductor sales.

 “The U.S. economy has entered a period of slower growth that may impact consumer purchases of electronic products,” Scalise continued. “However the emergence and growth of large consumer markets outside the U.S. has created new opportunities for chipmakers.”   

Scalise noted that PC demand outside the U.S. has grown steadily through the past decade. “In 1998, the U.S. accounted for more than 40% of all unit sales of personal computers,” he said. He expects the 2008 share of the U.S. to be about 21%.