Semiconductor Sales Grows by 10.5% to $20.5 Billion in August

Worldwide sales of semiconductors reached an all-time monthly record of $20.5 billion in August, an increase of 10.5 percent from the $18.6 billion reported in August 2005, the Semiconductor Industry Association (SIA) reported today. Sales increased by 2.1 percent from July 2006, when total semiconductor sales were $20.1 billion. The previous record for one-month worldwide chip sales was $20.4 billion in November 2005.

“Once again we saw relatively strong sales across a very broad range of semiconductor products, which reflects healthy end markets,” said SIA President George Scalise. “Sales growth was led by DRAMs, which increased by 7.5 percent from July and by 31.4 percent from August 2005, an indication that PC sales remained strong. Sales of microprocessors increased by 2.1 percent from July, while declining by 6.8 percent from a year ago. Strong competition has resulted in a year-on-year 18 percent decline in average selling prices for microprocessors as unit sales have increased.

“Semiconductor devices for consumer applications – NAND flash and consumer application-specific semiconductors – showed strong sequential growth, as manufacturers began gearing up for the holiday season,” Scalise continued. “A sharp decline in gasoline prices appears to have boosted consumer confidence, which bodes well for an industry that is now strongly driven by sales of consumer electronic products,” Scalise said. “The worldwide industry now derives more than 50 percent of its sales from the consumer market.” Scalise noted that the semiconductor content of newer consumer products such as cell phones, flash MP3 players, and digital cameras accounts for an average of 40 percent of the cost of such products.

“Inventories have risen both at semiconductor manufacturers and in the channel in recent months, but remain in line with requirements for the holiday build season,” Scalise concluded.

Capacity utilization remains strong. VLSI Research estimates that capacity utilization, which was at 92 percent in the second quarter, will remain at 95 percent for the remainder of the year. Capacity utilization remains high even as new 300mm manufacturing facilities continue to come on line. Facilities producing 300mm wafers now account for nearly one-quarter of total capacity – up from less than 15 percent at this time last year.

The SIA Global Sales Report
The SIA’s 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.

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 225,000 people.