The Semiconductor Industry organization reports that global semiconductor sales in February rose 1.5 percent from the year-earlier period to reach $20.44 billion. Though chip revenues fell 4.9 percent from January, the outcome was in line with normal seasonal patterns, the trade group said.

“Excluding memory products, worldwide semiconductor sales grew by nearly 10 percent year-on-year,” noted SIA President George Scalise. Even better, total unit shipments for all semiconductor products “increased by 11.6 percent year-on-year, indicating strength in the end markets that drive demand for microchips,” Scalise said.

DRAM’s Drag

Despite a slowing U.S. economy, markets outside North America continued to show robust growth in demand for electronic products that drive semiconductor sales, the SIA said. However, the underlying strength in the month’s global chip sales was masked by a continued decline in the price of DRAM memory chips, Scalise said.

“DRAM revenues declined by more than 40 percent year-on-year despite a 43 percent increase in unit shipments” and “average selling prices for DRAM chips declined by nearly

60 percent year-on-year,” Scalise explained.

The SIA’s latest report suggests that the surprising weakness in memory-chip sales that occurred in the fourth quarter is continuing to take the wind out of global chip sales. According to researchers at iSuppli, global DRAM revenue unexpectedly tanked 19.1 percent in last year’s fourth quarter, exceeding the research firm’s expectation of a 4.7 percent decline.

Moreover, NAND-flash revenue declined 3.9 percent in last year’s fourth quarter, causing memory-chip revenue to decline 11 percent overall, iSuppli said. “This was a complete role reversal for memory semiconductors compared to 2006,” when memory-chip “revenues helped to prop up the growth of the overall semiconductor industry,” observed iSuppli Senior Vice President Dale Ford.

The poor results for memory chips in 2007 ended up restraining market growth, the iSuppli analyst said. “If memory were excluded…

Original post by Chris Davies

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