Q1 global chip sales grew by 3.2 % from 2006

First-quarter global chip sales amounted to $61.0 billion, an increase of 3.2 percent from the $59.1 billion reported for the first quarter of 2006. Sales declined by 6.5 percent in the first quarter of 2007 compared to the $65.2 billion reported for the final quarter of 2006. “Global sales of semiconductors reversed three months of sequential declines with a nominal gain of just over 1 percent in March," said SIA President George Scalise. The SIA noted that price pressures resulting from intense competition in major market segments such as DRAMs, DSPs and NAND flash – key components of personal computers, cell phones, and other portable consumer products – limited industry growth despite higher unit shipments for these products in the most recent month. DRAM sales declined by just over 8 percent from the last quarter of 2006, reflecting strong pricing pressure as units increased over 16 percent while average sales prices dipped close to 20 percent over the same time period. Microprocessor revenues declined by nearly 13 percent from the prior quarter, reflecting a decline in unit sales while average sales prices remained almost unchanged. “Even with continued strength in unit sales of personal computers, mobile phones, and other portable consumer electronic products, an abundant supply of chips for these applications resulted in declining average selling prices as manufacturers sought to hold onto market share," Scalise continued. According to Gartner, total personal computer shipments in the first quarter were up 8.9 percent over the same period of 2006, in line with normal seasonal patterns. “The competitive pressures we've seen in the semiconductor industry over the past few months have led to record low prices for PCs – the average sales price for a consumer PC fell to $850 in the first quarter," Scalise added. “Sales for the year to date are running slightly ahead of last year's record level, but well short of the 10 percent growth projected in the forecast issued by SIA last November. Semiconductor sales are increasingly tied to worldwide economic performance and consumer confidence," Scalise continued. “Despite recent signs of slowing growth in the overall economy, consumer spending on electronic products appears to have held up fairly well," Scalise said. “The Conference Board last week expressed concern that rising prices at the gas pump could dampen short-term consumer expectations. To date, higher prices at the pump do not appear to have affected consumer spending on electronic products, but this remains a subject of concern. Recent reports that China's information technology sector is experiencing slower growth coupled with a U.S. GDP growth rate that fell to 1.3 percent in the first quarter are causes for caution concerning the near-term outlook for the semiconductor industry," Scalise concluded.