Chip sales on a path to recovery

Despite recent fears, the global chip market is slightly ahead of forecasts with a 2.1 per cent increase in sales for the first six months of the year

The Semiconductor Industry Association (SIA) has reported that sales in the first half of 2007 came in at $121bn, up slightly on the $118.4bn reported for the first half of 2006.

Strong PC sales helped prop up the market and forecasts for the rest of the year are much more positive. The increase in six-month revenues even defied a second-quarter slump, with sales of just under $60bn down two per cent on the $61.1bn recorded for Q1. June sales were also down to $20bn, a decline of 1.7 per cent from May. Unit shipments were up for the first half of the year, but price competition took its toll on revenues.

'Rapid price attrition in several market segments held growth in total semiconductor sales to justo ver two per cent in the first half of 2007, despite increases in total unit shipments of almost seven per cent,' said SIA president George Scalise.

'End unit demand in PCs and cell phones, is growing in line with forecasts. Together, these two market sectors drive about 60 per cent of semiconductor demand.

'Sales of PCs were strong in the second quarter, with unit growth projected at more than 10 per cent for 2007. PC buyers are continuing to reap the benefits of declining prices for microprocessors and DRam. The average price of a desktop system has fallen to about $700, while memory content has increased by about half over the past year.'

Although DRam prices are stabilising, Infineon joined Samsung and Hynix in reporting poor results thanks to rock-bottom memory prices. Its DRam spin-off Qimonda reported a loss of €218m, compared with profit of €54 million in 2006.

'In the third quarter, Infineon, excluding Qimonda, made further progress towards sustainable profitability,' said Infineon chief executive, Wolfgang Ziebart. 'We are actively exploring opportunities to sell part of our Qimonda stake.'