Consumer electronics keep semi sales strong, despite slipping US consumer confidence, SIA reports – 6/30/2008 – Electronic News

Consumer electronics keep semi sales strong, despite slipping US consumer confidence, SIA reports
The Semiconductor Industry Association reports that growing sales of consumer electronics in emerging markets have become a major factor driving semiconductor sales.
By Suzanne Deffree, Managing Editor, News — Electronic News, 6/30/2008

The Semiconductor Industry Association (SIA) today reported solid growth in the worldwide sale of semiconductors, despite the continuously rocky economic environment here in the United States.

The industry group estimated sales of semiconductors at $21.8 billion in May, up 7.5% on the $20.3 billion reported for May 2007 and up 2.8% on the $21.2 billion reported for April. May is historically a relatively strong month for semiconductor sales.(See chart below for more sales details.)

Year-to-date sales of $103.4 billion were up by 5.3% from the $98.2 billion reported for the first five months of 2007, SIA data showed.

To be true, SIA said that total semiconductor sales excluding memory products would have been higher. According to SIA, sales were up by 12.3% year-on-year and by 2.5% sequentially without memory. Within the segment, SIA reported DRAM sales were up sequentially by 6.4% but declined by more than 20% from May 2007. Meanwhile, NAND flash sales grew by 1.4% sequentially and by 25.5% from May 2007. SIA in early June lowered its estimate for full-year growth from 7.7% to 4.3% on the memory market’s price erosion.

“Global sales of semiconductors grew at a healthy rate in May reflecting continued strong sales of consumer electronic products,” said SIA President George Scalise (pictured) in a statement. “Despite reports of declining consumer confidence in the US, both disposable income and consumer spending rose in May. It is likely that the distribution of tax rebate checks to millions of Americans was a factor in increased consumer spending.”

SIA isn’t banking semiconductor sales growth entirely on US spending, however. The group noted that growing sales of consumer electronic products in emerging markets, including China, Latin America, and India, have become a major factor driving semiconductor sales.

“Consumers account for more than half of all semiconductor sales worldwide. In the past, the US was the largest consumer market and the primary driver of demand. Today this country accounts for less than a quarter of total consumer demand,” Scalise said.

“Until recently, the US accounted for approximately 31% of PC unit sales. Today, with the growth of the consumer base in emerging markets, the US accounts for around 21% of PC unit sales. Five years ago, the US accounted for 21% of cell phone unit sales, and in 2008 that figure will be 13%. ”

According to Scalise, the shift in demand patterns has major implications for the semiconductor industry. “While we haven’t seen a slowdown in US consumer spending on electronic products, a slowdown in the US today would not have the same impact it had in the past,” he said. “The addition of more than 300 million consumers in other regions has created new opportunities for the worldwide microchip industry, and a more diversified market has helped to drive increased sales of semiconductors.”

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