September 1, 2005 – Worldwide sales of semiconductors rose to $18.01 billion in July, an increase of 0.3% from the $17.96 billion reported in June, and a 0.03% decline from July 2004 sales of $18.02 billion, the Semiconductor Industry Association (SIA) reported today.

“Strong competition contributed to declining prices for semiconductors, which resulted in nominal growth on higher unit sales in July,” said SIA president George Scalise. “Although unit sales of personal computers and cell phones are running well ahead of earlier projections, a very competitive market has resulted in substantial price attrition.”

Scalise noted that the Gartner Group is projecting that prices for personal computers will decline by approximately 13% this year. Pathfinder Research projects an even more dramatic 25% decline in prices for desktop systems. Prices for cell phones are also declining in the face of strong competition. “Consumers are the beneficiaries,” Scalise noted.

“The overall economic outlook remains strong, despite recent dramatic increases in energy prices, and this bodes well for semiconductor sales for the remainder of 2005,” Scalise continued. “However there is some concern that high energy costs will impact sales of electronic consumer products if they continue to rise unabated,” Scalise concluded.

Semiconductor sales declined sequentially in all geographic regions except the Asia-Pacific region, which grew by 8.1%. Capacity utilization continued to improve, with overall utilization rising to 89% in the second quarter. Capacity utilization is expected to continue to improve in the current quarter.

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.