SIA: Semi Industry Clinging to Modest Growth

The Semiconductor Industry Association [SIA] released the monthly industry sales report for April, saying:

Worldwide sales of semiconductors of $19.9 billion in April were 1.6 percent higher than the $19.6 billion reported for April of 2006, but 2.1 percent lower than the $20.3 billion reported for March 2007, the Semiconductor Industry Association reported today. Total sales for the first four months of 2007 are up 3.7 percent compared to the same period of 2006.

The 1.6% year/year growth in semiconductor revenue comes despite 10% growth in unit sales. The excess capacity that has been building over the last year is now taking its toll in the form of more competitive pricing. But don’t take my word for it:

“A very competitive semiconductor market, with declining average selling prices (ASPs) in major industry segments, contributed to a sequential decline in worldwide chip sales,” said SIA President George Scalise. “Several of the largest segments of the semiconductor market – microprocessors, DRAMs, and NAND flash – are all experiencing ASPs that are declining more rapidly than historical patterns, offsetting growth in unit shipments.”

The good news is that, for the second consecutive month, semiconductor manufacturers have ordered new capacity at a slower rate than their own sales growth. Over time, this is the action that will restore balance between supply and demand.