News

posted on 05 May 2008 22:02

Semiconductor sales growth has been substantially retarded by the energetic price erosion in memory chips, slowing growth to 3.8 percent from 11 percent.

In the first quarter of calendar 2008 (Q1cy08) worldwide semiconductor sales were $63.4 billion according to the Semiconductor Industry Association (SIA), just 3.8 percent above the year-ago quarter.

George Scalise, SIA president, said: "Weakness in memory revenue as a result of rapid price erosion masks the overall strength of semiconductor sales. Excluding memory products, total semiconductor sales increased by a very healthy 11 percent year-on-year."
Sales were buoyed by growing consumer purchases of electronic products in world markets, more than offsetting the effects of a slowing U.S. economy.

DRAM prices continued to be under pressure despite healthy growth in bit demand. DRAM sales fell 37.4 percent year-on-year, notwithstanding a 30.6 percent increase in unit shipments. That helps to explain the difficulties faced by manufacturers such as Elpida.

The DRAM average selling price (ASP) fell by more than half, 52 percent. Micron Technology said 512Mbit DRAM prices declined an impressive 73 percent year-on-year. With JP Morgan expecting overall DRAM bit shipments to increase by 56 percent in 2008 this is a dragon chasing its own tail.

It was better in the NAND flash market. Sales revenue grew a by 45.9 percent with units increasing by about the same amount in Q1cy08 compared to the year-ago quarter. But price erosion has also been savage, with Micron recording a 70 percent drop in the 8Gbit NAND ASP since March 2007.

There is just too much capacity in the market despite the healthy growth in the demand for memory bits overall. The imformative Micron points out that an average PC has 1.817MB of memory now, more than twice what it had in 2006. A mobile phone's average DRAM was 12MB in 2006; now it is 36MB. But the NAND growth inside mobile phones has been staggering; at 412MB this year it is more than 1,300 percent above the 2006 level.

^{[Paul Roberts, news editor]}