August 4, 2008 – Memory concerns aside, there’s still reason to be happy with growth in the semiconductor industry, mainly thanks to emerging markets’ hunger for PCs and mobile phones, according to the latest data from the Semiconductor Industry Association (SIA).
Global semiconductor sales rose to $21.6B in June, barely higher (0.5%) than May but up 8% from a year ago. Minus the memory segment, sales grew 12% Y-Y; memory sales actually declined 6% Y-Y as price attrition more than offset “sharply increased unit sales,” the SIA said in a statement. The SIA’s final tally for May sales is now $21.46B, down ~-1.7% from original estimates of $21.83B.
From a wider scope, Chip sales in 2Q08 totaled $64.7B, up 3% from 1Q; and in 1H08 chip sales totaled $127.5B, up 5.4% from 1H07 — suggesting that rising oil prices have had little impact on demand for electronic products, and thus semiconductor sales.
By region, all regions except Japan (-6.8%) showed small single-digit growth in June, a trend that also held for the three-month moving average. And year-on-year, almost all regions also showed minor growth below the overall 8%, but it didn’t matter since Asia-Pacific outperformed (12.9%).
In a statement, SIA president George Scalise noted continued strength in international markets, plus healthy demand in the US, pointing particularly to double-digit growth in the two biggest semiconductor end-markets: PCs (~40% of semiconductor sales) and mobile phones (~20% of sales). He cited JP Morgan estimates of 13% unit growth in PCs this year, and industry estimates of 10%-12% for mobile handsets.
Scalise also pointed to the growing influence of emerging markets (and their expanding middle-class populations) in semiconductor sales. Half of worldwide PC sales will come from emerging markets this year, he said, with 19% growth in unit sales (double the rate of developing markets) to 153M units. And developing countries also will account for two-thirds (66%) of total mobile phone unit sales of >1.3B, up from 61% in 2007.
Despite seemingly sluggish chip sales figures, Scalise stated that “rapid price declines for microchips tend to mask the real growth of the industry.” Such steep declines, particularly in memory — 1G DRAM ASPs have sunk 43% in the past year, with a 61% drop in 2GB NAND flash — enable more memory to be used in consumer devices. Micron, he pointed out, sees a 50% increase in memory content/PC this year, and a 150% increase in memory content in cell phones.
