SIA: Q1 08 semiconductor sales rose 3.8% y-on-y

Global sales of semiconductors hit $63.4 billion for Q1 08, up 3.8 percent from $61.1 billion figures of Q1 07, reported the Semiconductor Industry Association (SIA).

March sales of $21.1 billion rose 3.4 percent from $20.5 billion reported for February. Sales declined by 5.1 percent in Q1 08 compared to the $66.8 billion for Q4 07 (View graph here). SIA said the decline reflects a normal seasonal decline from the historically strong fourth quarter.

Market explained
"Weakness in memory revenue as a result of rapid price erosion masks the overall strength of semiconductor sales," said SIA president George Scalise. "Excluding memory products, total semiconductor sales increased by a very healthy 11 percent y-on-y. "Sales were buoyed by growing consumer purchases of electronic products in world markets, more than offsetting the effects of a slowing U.S. economy. Although semiconductor sales in the U.S. grew more slowly than overall worldwide sales, revenues in the first quarter of the year still registered growth of 2.3 percent vs. the 3.8 percent growth worldwide y-on-y (View Table here).

Scalise added that according to a new Gartner report, PC unit sales grew by 12 percent in Q1 08, reaching 71.1 million units, with strong sales outside the U.S. and slower sales in the U.S. The U.S. market now accounts for approximately 21 percent of worldwide PC demand—down from over 31 percent just five years ago.

Noted Scalise: "Strength in the PC market was reflected in sales of microprocessors, which increased by 13.4 percent y-on-y. ASPs for microprocessors declined by a modest 3.5 percent over the past year, while units were up by 17.4 percent." PCs are said to be the largest single end market for semiconductors.

DRAM under pressure
DRAM prices continued to be under pressure despite healthy growth in bit demand. DRAM sales declined by 37.4 percent y-on-y despite a 30.6 percent increase in unit shipments. ASPs declined by 52 percent not taking product mix into account. According to Micron Technology, 512Mbit DRAM, prices declined 73 percent y-on-yr. Total DRAM bit shipments are expected to grow by 56 percent in 2008, according JP Morgan.

Sales of NAND flash memory revenue grew by 45.9 percent in the first quarter on unit shipments that increased almost 46 percent over last year. Prices remain under pressure. According to Micron, ASPs for 8Gbit NAND were down 70 percent from March 2007. SIA noted that NAND flash is widely used in cellphones, MP3 players, digital cameras and other hand-held electronic devices

Unit shipments of cellphones, which account for 20 percent of semiconductor sales, increased by 14.3 percent y-on-y. "Emerging markets are driving sales of cellphones, reflecting the rapid expansion of consumer markets in these regions," Scalise continued.

Consumer electronics
A recent report from Micron Technology underscores the rapid growth of semiconductor content in consumer electronic products. "Micron noted that the memory capacity of a typical PC has more than doubled from 2006 to 2008, to 1,817Mbyte on average this year," said Scalise. "The company also reported that the DRAM content of a typical handset has tripled from 12Mbyte to 36Mbyte, while the NAND content of a handset has increased by over 1,300 percent to 412Mbyte this year.

"Healthy sales of electronic products in world markets continue to drive demand for semiconductors. Global demand is in line with our expectations given current economic conditions, and we remain optimistic for the year," Scalise concluded.