Chip Sales Dip

Worldwide semiconductor sales in February were $20.09 billion, a 6.5 percent dip over the January period of $21.48 billion, according to a report this week by the Semiconductor Industry Association (SIA). Sales were down 8.3 percent in the Americas in February versus January.

However, the February numbers do represent a 4.2 percent increase worldwide from the $19.28 billion the SIA reported for last February 2006.

SIA’s president George Scalise, said while there is a seasonal decline, he noted other factors for February’s falloff. Scalise cited lower unit shipments and lower average selling prices (ASPs) in several key market segments as also contributing to the drop.

“Unit shipments of NAND  Flash increased sequentially while total sales saw a double-digit decline, indicating very competitive market conditions,” Scalise said in a release. A report in March from market researcher iSuppli also noted Flash prices were collapsing.

What Scalise termed “fiercely competitive market conditions” came even as unit shipments of key products increased across the board and ASPs declined. For example, unit sales of microprocessors were up almost 8 percent, while ASPs declined 15 percent, and NAND Flash units grew by over 40 percent while experiencing a nearly 50 percent drop in ASPs.

“These products tend to be indicators of conditions in important end markets, such as personal computers and consumer devices, said Scalise. “Personal computers and consumer products now account for approximately 60 percent of semiconductor sales. Both competitive conditions and product mix issues appear to be affecting revenues of these key components.”

But even with the decline, Scalise noted that sales for the year are running ahead of last year’s record pace.

There was also a certain amount of inventory build up in the last quarter of 2006 that was still making its way through the semiconductor or chip supply chain in February. SIA reported that overall capacity utilization declined from 88.9 percent in the third quarter of 2006 to 86.8 percent in the fourth quarter. Most of the decline was in foundry utilization, which fell from 91.5 percent in the third quarter to 80.9 percent in the fourth quarter.