September 5, 2006 – Chip sales inched up in July to exceed $20 billion, and are still on pace to surpass a record $240 billion by year’s end, according to new data from the Semiconductor Industry Association (SIA).

Total chip sales in July were $20.10 billion, up 1.8% from June’s $19.75 billion, and an 11.5% increase from $18.02 billion in July 2005. Month-on-month, the Americas region grew the most (4.1% to $3.69 billion), with Japan and Asia-Pacific up 1%-2%, and Europe basically flat. Year-on-year, the Americas region also is showing better growth than the Asia-Pacific region (17.5% to 13.4%), followed by Japan (8.2%) and Europe (4.0%). Based on a three-month moving average, Asia still is ahead by a few points (3.8%), with America and Japan showing 2.6%-3.0% growth, and Europe sliding -2.0%.

July’s results “reflect the historical pattern for the industry with growth in unit demand coupled with declining average selling prices,” leading to very attractive prices for many consumer products, stated SIA president George Scalise, noting that average selling prices for PCs declined approximately 7% year-on-year.

Growth is strong across a broad range of end markets and regions, and capital spending and utilization rates seem to be in balance, noted Scalise. Capital spending this year is projected to be ~22% of semiconductor sales, in line with anticipated technology requirements and anticipated sales growth, he noted. Meanwhile, capacity utilization rates edge up slightly in 2Q06 to 91%, with leading-edge capacity still very high at about 97%.