Netbooks boost global semiconductor sales

Chip shipments are up, thanks to new mobile devices

Chip sales are growing, partly driven by growing netbook sales and falling laptop prices, market research firms say.

Global semiconductor sales grew by 5 percent from July to August as consumers picked up more laptops, especially netbooks, says the Semiconductor Industry Association (SIA) in a study. Consumers are drawn to the lower prices of netbooks, which account for close to 17 percent of total laptop unit shipments worldwide, the SIA says.

"Growing sales of netbook personal computers ... have created an important new market segment, filling a gap between 'smart cellphones' and conventional laptop PCs," says SIA president George Scalise. Netbooks have small screens and keyboards and are designed to run basic internet and productivity applications.

Laptop prices have fallen by close to 14 percent compared to last year and the memory used in these devices has increased 25 percent, the SIA says. That has contributed to growing chip sales, which totaled US$19.1 billion in August.

Semiconductor sales also rose in July compared to June, research firm iSuppli says. The August sales growth points to a slow recovery from the steepest downturn the industry has faced in close to a decade, the firm says. Semiconductor sales grew across all major regions, with sales in Asia-Pacific growing by 5.3 percent and the Americas recording 5.4 percent growth.

Consumer electronics — including mobile phones and laptops — accounted for the bulk of the semiconductor sales. Semiconductors such as processors, and storage devices like flash memory go into devices such as PCs and cell phones. Semiconductor sales to the consumer electronics sector increased by about 28 percent in the third quarter compared to the second quarter, iSuppli says in a statement.

"This reveals a pattern of solid sequential growth for the first two months of the third quarter," iSuppli says. However, chip sales fell by 16 percent compared to August 2008, according to the SIA. ISuppli predicts a third-quarter revenue decline of 16 percent on a year-over-year basis. ISuppli recently projected that semiconductor revenue could grow by as much as 13.8 percent in 2010.

Intel CEO Paul Otellini recently said that the company's chip shipments were stabilising as PC unit shipments showed signs of recovery. Companies such as AMD and Dell have also said PC shipments could recover as users upgrade PCs with Microsoft's upcoming Windows 7 OS, which will be officially released on October 22.

Analyst firm IDC in July reported stronger-than-expected PC shipments for the second quarter of this year, boosted by a strong interest in laptops and lower prices. PC shipments fell by 3.1 percent, less than IDC's original projection of 6.3 percent for the second quarter.

However, IDC warned that laptop shipments were affected by weak enterprise spending, which may pick up next year as companies look to upgrade to newer hardware and software.

Semiconductors also include chips that go into cars. Chip sales to the automotive sector grew by 30.2 percent, boosted by efforts like the "Cash for Clunkers" program in which discounts were offered by the US government for trading in old for new vehicles, SIA says.

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