Holiday Electronics Sales Boost Chip Demand

Sales of semiconductors in November indicate that consumer products such as LCD (liquid crystal display) TVs, digital music players and other devices sold well during the holidays, the Semiconductor Industry Association (SIA) said this week.

November chip sales rose 2.3 percent year-on-year to US$23.1 billion, the SIA said.

Unit demand has far outpaced last year. But falling chip prices have hurt industry revenue, the chip association said. For example, DRAM (dynamic RAM) bit shipments grew 25 percent in the three months through mid-December, but average selling prices have declined 20 percent over the same period.

The association also noted that rising energy prices and concerns about the sub-prime lending issue in the U.S. do not appear to have had a significant impact on consumer spending for the holidays, the SIA said. The group reiterated its forecast that worldwide semiconductor sales will reach a new record in 2007. But it will take a stronger than expected December selling season to reach the 3.8 percent growth goal the group had forecast earlier this year, the SIA said.

Investment banking firm Credit Suisse was not as optimistic as the SIA.

The November data was below normal seasonal trends, noted analyst John Pitzer, in a report on Monday. Even if December reaches its normal seasonal growth, 2007 industry revenue will only reach US$255.7 billion, up 3.2 percent over last year. The growth percentage would fall short of the SIA's 3.8 percent target.

The slow November prompted Credit Suisse to lower its 2008 chip industry revenue forecast to 9.4 percent year-on-year growth, down from a previous target of 13 percent.