SIA: Economic Downturn Causes 2.8% Drop in 2008 Semiconductor Sales
February 19, 2009 // Published as a news service by IHS
Global sales of semiconductors were affected by the worldwide economic downturn in 2008, according to a report by the Semiconductor Industry Association (SIA), resulting in the first year-on-year drop in sales since 2001.
Total sales for 2008 were $248.6 billion, compared to $255.6 billion in 2007, a decrease of 2.8%, according to the SIA report.
Sales fell from $22.3 billion in December 2007 to $17.4 billion in December 2008, a decline of 22%. December sales declined by 16.6% from November 2008 when sales were $20.9 billion, according to the report.
"The global economic recession severely dampened semiconductor sales in the fourth quarter of 2008, historically a strong quarter for the industry," said SIA President George Scalise.
"Weakening demand for the major drivers of semiconductor sales - including automotive products, personal computers, cell phones and corporate information technology products - resulted in a sharp drop in industry sales that affected nearly all product lines. Once again, the steepest revenue declines were in the memory sector where price pressure more than offset significant growth in total bit shipments," Scalise said.
"As consumers worldwide drive over 50% of demand for semiconductors, the fortunes of the chip industry are increasingly linked to macroeconomic conditions such as GDP [gross domestic product], consumer confidence and disposable income," said Scalise. "Sales of electronic products held up reasonably well during the first nine months of 2008, but fell sharply as turmoil in the global financial industry unfolded," he said.
"The memory content of cell phones and PCs continued to increase dramatically driving large increases in total bit shipments. Over the past 12 months, DRAM [dynamic random access memory] content of the typical PC grew by 44% to an average of 1.8 gigabytes [GB], while the NAND [Not And] content of a typical cell phone increased by 244%. However, severe price pressure resulted in significant declines in revenues for these product lines," Scalise said.
"The industry is currently facing an unprecedented period of uncertainty," said Scalise. "A resumption of sales growth will depend in part on the effectiveness of various measures now under consideration by the federal government to restore consumer confidence, improve liquidity and stimulate economic growth."
The SIA Global Sales Report is a three-month moving average of sales activity. The report is tabulated by the World Semiconductor Trade Statistics organization, which was established by the global semiconductor industry to compile industry statistics.
The moving average is a mathematical "smoothing" technique that mitigates variations due to differences in companies' financial calendars.
Source: Semiconductor Industry Association (SIA).