May 31, 2005 – Worldwide sales of semiconductors declined slightly in April to $18.2 billion, a sequential decline of 1.2% from the $18.4 billion reported in March, the Semiconductor Industry Association (SIA) reported today. April sales were up 6.9% from the $17.0 billion reported in April 2004. The SIA noted that April is traditionally a strong month for semiconductor sales.

“Two factors – a decline in DRAM prices and a lower mix of semiconductors for cell phones – contributed to a slight decline in worldwide semiconductor sales in April,” stated SIA president George Scalise. “For much of the past year, cell phone manufacturers were working off inventories of chips used in low-end cell phones, which resulted in a richer mix of products shipped. Once those inventories were depleted and normal purchasing patterns resumed, overall ASPs for circuits for cell phones declined. Plentiful supplies of DRAMs contributed to declining prices and a 7% sequential decline in DRAM sales in April.”

The SIA reported that overall factory utilization declined slightly in the first quarter to around 85% from 86% in the 4Q04. Utilization of leading-edge capacity (defined as capable of producing 0.16-micron and smaller geometries) increased to 94% from 93%. Capacity utilization by integrated device manufacturers remained stable at 87%. Foundry utilization continued to decline to 72% of capacity in the first quarter from 78% in the prior quarter.

“Despite the slight decline in April sales, the overall outlook for the semiconductor industry remains strong,” said Scalise. “Excess inventories have been eliminated and capacity utilization remains at reasonable levels. Energy prices appear to have stabilized, and US economic growth – an important bellwether for the semiconductor industry –continues to be strong. On the whole, worldwide semiconductor sales continue to run ahead of our November forecast.”