August Chip Sales Notch $20.5 Billion

It’s good to be a chipmaker these days.

Worldwide sales of semiconductors reached a monthly record of $20.5 billion in August, a 10.5 percent increase from the $18.6 billion reported in August 2005, according to new tallies from the Semiconductor Industry Association (SIA).

The latest figures also represent a 2.1 percent bump in sales from July 2006, when semiconductor sales totaled $20.1 billion.

How does SIA account for the year-over-year boom?

SIA President George Scalise said that chips for PCs and NAND Flash semiconductors for consumer applications paved the way for a successful month. NAND Flash packs the storage wallop in small gadgets such as MP3 players, cell phones and digital cameras.

“Sales growth was led by DRAMs, which increased by 7.5 percent from July and by 31.4 percent from August 2005, an indication that PC sales remained strong,” Scalise said in a statement.

“Semiconductor devices for consumer applications ?- NAND Flash and consumer application-specific semiconductors -? showed strong sequential growth, as manufacturers began gearing up for the holiday season,” Scalise added.

Scalise attributed the spending uptick to the recent decline in gasoline prices, a trend that boosts consumer confidence.

He said this bodes well for an industry that is now driven by sales of consumer electronic products, such as smartphones, handheld computers and digital cameras, with more than 50 percent of sales worldwide coming from the consumer market.

Moreover, the increased demand has caused chipmakers to slash prices to stay competitive, resulting in a year-over-year 18 percent decline in average selling prices for microprocessors.

Intel  and AMD  remain the market leaders for PC and server chips, while vendors like Samsung and Toshiba vie for NAND Flash market share.

The key going forward lies in innovation.

Intel and AMD expect to ramp up their development of virtualization technologies for their chips, as well as pushing the envelope in multi-core processor development.

Samsung and Toshiba are focused on packing more memory into as small a chip footprint as possible.

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