May Semiconductor Sales up 9.4 Percent Over 2005; Cell Phones and Consumer Electronics Fuel Growth

--Worldwide sales of semiconductors of $19.7 billion in May grew by 9.4 percent over the May 2005 sales of $18.1 billion, the Semiconductor Industry Association (SIA) reported today. Sales rose by 0.7 percent from April 2006 when sales were $19.6 billion.

"Worldwide sales of semiconductors in May continued to reflect generally favorable worldwide economic conditions," said SIA President George Scalise. "As consumer products drive an increasing proportion of microchip sales, the growth of the semiconductor industry more closely reflects overall economic growth. Sales of cell phones and other consumer electronics products once again were the principal contributors to growth in semiconductor sales. Sales of analog chips grew by 21.5 percent from May of 2005, while digital signal processor (DSP) sales grew by 13.7 percent." Analog devices and DSP chips are important components of cell phones.

"Strong growth in sales of NOR flash memory products and optoelectronic devices are indicators of continued growth in sales of digital cameras and cell phones. Unit sales of personal computers have continued to run ahead of expectations, contributing to 13.7 percent year-on-year growth in sales of DRAMs. Sales of PC microprocessors declined by 2 percent from May of 2005, reflecting both robust competition and some inventory corrections in this major market segment. Consumers continue to benefit from this competition, as the average selling price for a notebook computer has fallen below $1,000 for the first time ever," Scalise said.

In June the SIA raised its forecast for 2006 worldwide sales growth from 7.9 percent to 9.8 percent. "We expect to see global semiconductor sales running 9 to 10 percent ahead of last year's pace for the next several months. End market demand, inventory levels, and capacity utilization all indicate generally favorable conditions for the industry," Scalise concluded.

The SIA's Global Sales Report (GSR) is a three-month moving average of sales activity. The GSR is tabulated by the World Semiconductor Trade Statistics (WSTS) organization, which represents approximately 66 companies. The moving average is a mathematical smoothing technique that mitigates variations due to companies' financial calendars.

The SIA is the leading voice for the semiconductor industry and has represented U.S. semiconductor companies since 1977. Collectively, the chip industry employs a domestic workforce of 225,000 people. More information about the SIA can be found at www.sia-online.org.