August 3, 2006 – Worldwide sales of semiconductors slipped 0.9% in 2Q06 from the previous quarter, but were up 9% year-on-year, as the industry tries to balance strong unit demand with downward pressure on average selling prices (ASP).
Chip sales in June totaled $19.6 billion (representing a moving three-month average), vs. $19.78 billion in May, and $17.96 billion in June 2005. 2Q06 sales came in at $58.9 billion, a decrease of 0.3% from 1Q06 but up 9.4% from 2Q05. 1H06 sales totaled $118 billion, up 8.3% over 1H05 sales of about $108.95 billion, and down about 0.4% from 2H05 sales of $118.53 billion.
Sales in most geographic regions were flat or slightly up in June vs. the previous month, except for the Asia-Pacific region (-0.9%). Based on a three-month rolling average, all regions showed slight declines, led by North America (-5%). Year-on-year, both North America and Asia achieved double-digit growth in June (11.4% and 12.8%, respectively).
SIA president George Scalise noted the sales growth Y-Y, and stagnation M-M and Q-Q, reflects the current environment reported by chipmakers and suppliers over the past few weeks. While unit demand has remained strong, up about 5% across the industry during 2Q, strong competitive pressures have reduced prices in some major product sectors, impacting revenues. In a Webcast discussing the data, Scalise pointed to a noticeable dropoff in the microprocessor segment — sales sunk 18% from 1Q to 2Q, and were 12% lower than a year ago. The segment has been impacted by a significant price decline, reflecting an inventory correction and competitive pressures (read: Intel and AMD), he noted.
End market demand is still very strong, Scalise said — unit sales of PCs rose about 10% in 2Q over the same period a year ago. But pricing pressures are hurting here as well. During the same timeframe, the average price of a laptop fell by more than 18%, to an average of about $960, Scalise noted.
Communications applications remain strong, particularly for cell phones, which ended the quarter with 235 million unit shipments, and is expected to grow 4% in 3Q and “at least 10%” in 4Q, amounting to total growth of 20% in 2006, and nearly a billion units shipped by year’s end, Scalise noted. Digital TVs also are showing strong growth (~50% projected for the year), while MP3 players “are a little bit weaker, but not that much,” Scalise said.
Despite heightened geopolitical concerns, linked to oil and gas prices that continue to creep higher, Scalise nevertheless maintained optimism about keeping to the SIA’s 2006 forecast of 9.8% sales growth. “If there’s any impact from [rising energy prices], it’s minimal at this point,” he said.
Major product line summary, 2Q06
(Sales in US $B)
Product………………………2Q06…..vs. 1Q06 (% change)…..vs. 2Q05 (% change)
Discrete…………………….4.15……….3.85 (7.9)………….3.78 (9.9)
Optoelectronics…………..4.07……….3.91 (4.0)………….3.62 (12.6)
Analog………………………9.27……….7.66 (21.0)………..8.89 (4.2)
MOS Microprocessors……7.25……….8.27 (-12.2)……….8.84 (-18.0)
MOS Microcontrollers……3.19……….2.96 (7.6)………….2.98 (7.1)
MOS DSP…………………..2.11……….1.84 (14.7)………..2.04 (3.3)
MOS Logic………………..14.11……..13.62 (3.6)………..14.56 (-3.1)
MOS DRAM…………………7.44……….5.94 (25.3)………..6.65 (11.9)
NAND flash…………………2.63……….2.23 (18.0)………..3.04 (-13.5)
NOR flash…………………..2.17……….1.85 (17.3)………..2.03 (7.3)
Source: SIA, WSTS