February 1, 2005 – Worldwide sales of semiconductors reached a record $213 billion in 2004, a year-on-year increase of 28% from the $166.4 billion recorded in 2003, the Semiconductor Industry Association (SIA) reported.

Chip sales declined in December by 3.5% sequentially to $18.4 billion from the $19.0 billion reported for November, in line with historical seasonality. December sales were 14.6% higher than in December 2003. Fourth-quarter sales, at $55.1 billion, declined by 0.8% from the immediate-prior quarter sales of $55.5 billion.

“Strong demand from a very broad spectrum of end markets propelled worldwide semiconductor sales to a record $213 billion in 2004,” said SIA president George Scalise. “For the first time since 2000, global chip sales surpassed $200 billion. The industry’s growth over the past three years is even more remarkable when viewed in a broader perspective. Worldwide sales of semiconductors fell to $139 billion in 2001 following the collapse of the dot-com boom, the 9/11 terrorist attacks, and a mild economic downturn.

“Fears that high gasoline prices would seriously dampen sales of consumer electronics during the holiday season did not materialize,” Scalise said. “A moderation of gas prices coupled with good economic growth appears to have bolstered consumer confidence, an increasingly important consideration for the semiconductor industry, as purchases by individual consumers now account for more than half of all chip sales.”

Scalise noted that very strong year-on-year growth during the first half of 2004 drove worldwide sales growth at a faster rate than the earlier SIA forecast of 19% growth for the year as a whole. Global chip sales grew by 36.5% year-on-year during the first half of 2004 compared to 21% in the second half. “By any standard, the 21% year-on-year growth in the second half of 2004 was very robust, but did not match the extremely strong first-half growth rate,” Scalise continued.

“We expect that global sales will decline by 4-6% sequentially in the current quarter in part due to continuing efforts by the entire supply chain to reduce excess inventories and a very competitive market environment. A seasonal decline in consumer spending patterns in the first quarter also contributes to our forecast of a modest decline. We believe factory utilization rates will continue to decline modestly in the first quarter. Our outlook for the year as whole continues to project essentially flat sales at the record level of 2004,” Scalise concluded.

The Asia-Pacific Region, which includes China and Taiwan, once again led the world in sales growth with a year-on-year increase of more than 41%. At $88.7 billion in total semiconductor sales, the Asia-Pacific Region was nearly double the size of the second-largest market, Japan, with total sales of $45.7 billion. Chip sales in Europe grew by 22% year-on-year; in the Americas by 21%; and in Japan by 17.5%.