According to the latest report from the Semiconductor Industry Association (SIA), chip sales growth was driven in October by strong demand for the processors used in PCs and consumer electronics, pushing worldwide semiconductor sales to $23.1 billion in October -- a 5 percent rise in comparison with the same month last year.
Despite rising energy costs and other concerns, consumers continue to spend money on the latest electronics products, noted the trade association's president, George Scalise, who pointed to the strong "Black Friday" sales reported by U.S. retailers for the first shopping day after Thanksgiving.
"At this point, it does not appear that reported declines in consumer confidence or other concerns have affected sales of electronic products," Scalise noted. "We will be closely watching consumer sales of electronic products through the holiday season."
Chip Industry's Mantra
October's healthy year-over-year growth came to pass in spite of the negative effects of chip price cuts, which are most dramatic in memory chips. Though RAM shipments have climbed by 55 percent so far this year, RAM pricing has risen only by 5 percent, Scalise noted.
A similar story has been unfolding in the processor segment due in large part to the intense price war between AMD and Intel. The SIA reported that revenue from microprocessors has risen only by 4 percent in the year to date, even though unit shipments are up by 15 percent. "Consumers are reaping huge benefits from continued rapid price attrition in key sectors of the semiconductor market," Scalise said.
The SIA said chip sales for all of 2007 continue to track the trade association's annual prognostication, which calls for 3.8 percent year-over-year growth. "This year the worldwide microchip industry will produce 900 million transistors for every man, woman, and child on earth," Scalise claimed.
Continuous advances in microchip technology have made "faster, better, cheaper" the mantra of our industry, Scalise went on to say. "This fundamental value proposition will continue to drive industry sales growth in the years ahead," he predicted.
Shift to Asia-Pacific
Citing the latest figures from brokerage house JP Morgan, the SIA said PC sales are now poised to grow by 13.5 percent this year. Moreover, the SIA's annual forecast calls for the unit shipments of cellular handsets, multimedia players, and digital TVs to rise at healthy growth rates of 12 percent, 20 percent, and 50 percent, respectively.
Progress in semiconductor technology has been a huge boon to consumers, Scalise noted. "Today a typical PC sells for less than 30 percent of the price of a comparable unit in 1995, but today's model is 100 times more powerful," Scalise explained. "We can expect to see similar cost and performance improvements in other silicon-intensive consumer products in the years ahead."
The SIA now projects that worldwide sales will exceed $321 billion in 2010, equivalent to a compound annual growth rate of 7.7 percent. Moreover, the Asia-Pacific region is expected to continue to lead the way by growing from 48.4 percent of the global chip market in 2007 to 51.1 percent in 2010.
"The increasing proliferation of semiconductors into an ever-broader range of consumer products coupled with the emergence of large new consumer markets in Asia, Eastern Europe, and South America will be the principal drivers of industry growth for the next several years," Scalise concluded.