The processor market is healthy and, despite weak DRam prices in the first half of 2005, things are looking up for the coming months.
According to the latest market barometers from the Semiconductor Industry Association (SIA) and iSuppli, the overall chip market managed to grow for the first six months and rising DRam prices look set to boost growth.
The SIA reported that for the first six months of 2005, global chip sales totalled $109bn, an increase of 6.5 per cent over the first six months of 2004, which had sales of $102.4bn. However, sales in the second quarter of 2005 came in at $53.9bn, a sequential decline of 2.1 per cent against Q1, thanks largely to typically fierce DRam price collapses.
“The nominal decline in global semiconductor sales in June was caused in part by inventory adjustments in the distribution channel and price attrition in DRams,” said SIA president George Scalise. “We are encouraged by the fact that sales for the first half of this year were up by 6.5 per cent over the same period of 2004. The strongest growth in 2004 occurred in the first half of the year. In contrast, we expect the strongest growth in 2005 to occur in the second half of the year.”
This prediction will be helped by the steady increase in the cost of DRam, noted by iSuppli, which compares favourably to the plummeting prices in Q2. The market watcher said that weakness prevailed throughout Q2 due to weak demand forcing prices down. DRam revenue in the second quarter fell to $5.7bn, down 13 per cent from $6.6bn in Q1, with three of the top four DRam suppliers suffering double-digit percentage declines in revenue.
“Although global shipments of DRam megabytes increased by 15 per cent in the second quarter, compared to the first, the increase was reversed by a 25 per cent decline in average selling prices,” explained iSuppli analyst Nam Hyung Kim. “DRam prices began to recover in July, prompting iSuppli to raise its rating of market conditions to “neutral”, up from “negative”.
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