Global semiconductor sales fell by 2.8 per cent in 2008

Global sales of semiconductors were severely impacted by the world-wide economic turmoil in 2008 resulting in the first year-on-year drop in sales since 2001, the Semiconductor Industry Association (SIA) said yesterday.

Total sales for 2008 were $248.6 billion compared to $255.6 billion in 2007, a decrease of 2.8 per cent. Sales fell from $22.3 billion in December 2007 to $17.4 billion in December 2008, a decline of 22 per cent and December sales declined by 16.6 per cent from November 2008 when sales were $20.9 billion.

''The global economic recession severely dampened semiconductor sales in the fourth quarter of 2008, historically a strong quarter for the industry,'' said SIA president George Scalise.

''Weakening demand for the major drivers of semiconductor sales -- including automotive products, personal computers, cell phones, and corporate information technology products – resulted in a sharp drop in industry sales that affected nearly all product lines. Once again, the steepest revenue declines were in the memory sector where price pressure more than offset significant growth in total bit shipments,'' he added.

As consumers worldwide drive over 50 per cent of demand for semiconductors, the fortunes of the chip industry are increasingly linked to macroeconomic conditions such as GDP, consumer confidence, and disposable income.

Sales of electronic products held up reasonably well during the first nine months of 2008, but fell sharply as turmoil in the global financial industry unfolded.
The memory content of cell phones and PCs continued to increase dramatically driving large increases in total bit shipments.

Over the past 10months, DRAM content of the typical PC grew by 44 per cent to an average of 1.8 gigabytes, while the NAND content of a typical cell phone increased by 244 per cent.

However, severe price pressure resulted in significant declines in revenues for these product lines.

''With the industry currently facing an unprecedented period of uncertainty, the resumption of sales growth will depend in part on the effectiveness of various measures now under consideration by the federal government to restore consumer confidence, improve liquidity, and stimulate economic growth,'' Scalise concluded.