Chip sales leap 9.4% in May

But strong competition keeps chip prices down

Semiconductor sales grew 9.4% year-over-year in May, fueled by strong demand for mobile phones and consumer electronics, says the Semiconductor Industry Association (SIA).

Global chip sales rose to US$19.7 billion (NZ$32.2 billion) in May, up from US$18.1 billion during the same month last year, and also up slightly from April.

Healthy sales of personal computers also contributed to strong chip demand, the SIA says, pumping up DRAM (dynamic RAM) growth to 13.7% in May.

But heavy demand for chips isn't driving up prices. Users are benefitting from strong competition, since the average price of a notebook computer dropped below US$1,000 (NZ$1,637) for the first time, the SIA notes.

Chip sales should remain strong going forward. "We expect to see global semiconductor sales running 9% to 10% ahead of last year's pace for the next several months. End market demand, inventory levels, and capacity utilisation all indicate generally favorable conditions for the industry," says George Scalise, president of SIA, in a statement.

The industry association, which has represented chip companies since 1977, in June raised its forecast for 2006 worldwide chip sales growth to 9.8% from 7.9%.

SIA Chart of Year-on-Year Sales

MarketMay, 2006May, 2005Percent change
Americas$3.52 billion$3.21 billion9.6 percent
Europe$3.21 billion$3.19 billion0.5 percent
Japan$3.78 billion$3.62 billion4.6 percent
Asia-Pacific$9.23 billion$8.03 billion15.0 percent
Total$19.75 billion$18.05 billion9.4 percent
Source: SIA

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