Consumer Devices Power Chip Sales

The computer chip industry continues to break sales records. In October,
worldwide sales of semiconductors reached a new high watermark, surpassing
$20 billion, according to figures released today by the Semiconductor Industry Association.

Sales are up 6.75 percent from the $18.4 billion that the SIA reported for October 2004, and 2.5 percent from $19.6
billion reported for September of this year.

While all the major segments of the market showed growth, the San Jose,
Calif., trade group pointed to consumer electronics as a key driver of the
increased sales.

“A sharp rebound in consumer confidence was reflected in strong sales of
a broad range of consumer products, such as cell phones, MP3 players,
digital cameras, digital TVs, and personal computers,” SIA President George
Scalise said in a statement. “Industry sales continue to track with our
forecast of 6.8 percent growth to $228 billion in 2005. Inventories are in
balance, and production capacity utilization remains in the healthy 90
percent range.”

Last month, the SIA forecast
worldwide sales of microchips will reach $309 billion in 2008 an increase
of 45 percent from the $213 billion record level of 2004.

A Merrill Lynch analysis of the SIA figures and its own research
forecasts semiconductor growth of 7 percent in 2005 and 10 percent for 2006.

In the memory market, Merrill Lynch notes the average selling price of
DRAM has declined four percent from September to October. The
research firm expects further price declines though there may be an uptick
with new processor introductions in January.

Merrill Lynch predicts any significant increase in the amount of standard
memory in desktop and notebook computers isn’t likely to happen until the
launch of Microsoft’s Vista operating system in the second half of 2006.

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