July 5, 2006 – Worldwide sales of semiconductors inched back up to a positive gain in May 2006, growing 0.7% from April to $19.6 billion. Year-on-year, sales growth increased to 9.4%, from 8.1% in the previous month.

Once again, cell phones and other consumer electronics products drove demand — sales of analog chips grew 21.5% from a year ago, and digital signal processor (DSP) sales rose 13.7% year-on-year. Other related areas also enjoyed growth, with sales of NOR flash memory products and optoelectronic devices helped by sales of phones as well as digital cameras, noted SIA president George Scalise.

Meanwhile, PC sales are running ahead of expectations, contributing to nearly 13% year-on-year growth in DRAM sales, although microprocessor sales dipped 2% from May 2005, reflecting significant competition among vendors, as well as inventory corrections, said Scalise, noting that average selling prices for notebook computers are now below $1000 for the first time ever.

By region, the Asia-Pacific saw 2.2% sequential growth in May to reach $9.23 billion, while the US lose 2.1% to close at $3.52 billion. Sales in Europe slipped -0.7% to $3.21 billion, while sales in Japan rose 0.9% to $3.78 billion. Compared with a year ago, the Asia-Pacific (15.0%) and Americas (9.6%) continue to pace global chip sales growth, with Japan showing minor gains (4.6%), and Europe remaining mostly flat (0.5%). Based on a three-month moving average, however, chip sales in the Americas actually shrunk by 5.4%, compared with 3%-4% increases in Europe and Japan, and a 5% increase in Asia.

Weeks after updating its midyear forecast for annual chip sales (to 9.8%, from 7.9%), the SIA maintains global semiconductor sales will run 9%-10% ahead of last year’s pace for at least the next several months. “End market demand, inventory levels, and capacity utilization all indicate generally favorable conditions for the industry,” Scalise stated.