Chips Finish Year on a High

With the giant Consumer Electronics Show set to start Wednesday, data
released today underscores the strength of the industry based on chip sales.

Worldwide sales of computer chips continued on a record pace, reaching $20.4
billion in November, according to the Semiconductor Industry Association (SIA).

“The main story of 2005 is the one of growing importance of consumers in
driving sales of semiconductors,” George Scalise, SIA president, said in a
statement. “Strong holiday season sales of consumer products, such as cell
phones, digital cameras, and MP3 players, drove record sales of
semiconductors in November.”

The latest SIA report notes that sales of Flash memory devices, a key
component in many handheld consumer products, were up by 33 percent from
November 2004. Sales of another consumer technology component,
application-specific standard circuits, were up by nearly 34 percent from
last year.

Worldwide semiconductor sales increased by 7.2 percent from the $19
billion reported for November 2004, and up 1.7 percent sequentially from the
$20.1 billion reported for October.

Based in San Jose, Calif., SIA uses information tabulated by the World Semiconductor Trade Statistics
organization, which represents approximately 66 companies. Using that data,
SIA produces a global sales report that is a three-month moving average of
chip sales activity.

In June, the SIA noted
that despite the effects of higher-energy prices on discretionary spending
by consumers, purchases of consumer electronics devices increased by 11
percent in 2004 to approximately $1,250 per household.

SIA projects an 11
percent increase in consumer spending on electronics in 2005.

Looking ahead to 2006 and beyond, Scalise noted that the growing
pervasiveness of microchips in everyday products and a strong underlying
economy have combined to create what he called “a very favorable climate for
the microelectronics industry.”

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