Semiconductor sales hit peak

Worldwide sales of semiconductors of $19.66 billion in January were 7 percent higher than January of 2005 when global sales were $18.38 billion, the Semiconductor Industry Association (SIA) of America reported recently.

With a new record set in 2005, with $227.5 billion in sales recorded, 2006 looks to be another record breaking year.

"The new year got off to a good start for the global semiconductor industry with strong year-on-year growth in a historically weak month," said SIA President George Scalise. "Retail sales, including consumer electronics products, were relatively strong in January and helped dampen the expected seasonal decline in sales. The industry entered the new year in a healthy condition. There are no excess inventories, end market demand remains strong, and capacity use rates are very high. There are signs of recovery in the market for networking equipment, and reports from manufacturers of personal computers and cell phones reflect continued optimism."

SIA noted that overall capacity use increased from 90 to 92 per cent in the fourth quarter of 2005. Use of leading-edge capacity (defined as facilities capable of producing 0.12-micron and finer geometries) increased from 97 to 99 per cent. "Industry capital spending was essentially flat in 2005, and recent forecasts indicate that capital expenditures will grow between 4 and 6 percent in 2006," said Scalise. "With capacity expansion in line with expected growth in demand for semiconductors, we do not foresee any excess capacity issues in 2006.

Scalise noted that the semiconductor sales data reflect the continuing shift of electronics manufacturing operations to the Asia-Pacific region in general and to China in particular. "Sales of semiconductors in the Asia-Pacific region reached $9.3 billion in December 2005 " a 20 percent increase from December 2004," Scalise said. "This region represented 46.6 percent of the global market for microchips at year end. The largest share of the market is in China, which has become the world's leading manufacturer of electronics products."

SIA forecasts that worldwide sales of semiconductors will grow by 7.9 percent in 2006 to $245 billion.