Cellphones Drive Semiconductor Sales Upwards

The Semiconductor Industry Association (SIA) has reported that global sales of semiconductors reached a record US$247.7 billion in 2006, an increase of 8.9 percent over 2005. SIA noted that capacity utilization rates remained strong throughout 2006. Strategic Marketing Associates estimates that the worldwide industry spent approximately 22 percent of revenues on capital additions in 2006. SIA commented that the current ratio of capital expenditures to sales is in line with maintaining balanced supply and demand.

"2006 was the 'Year of the Consumer' in the electronics industry," said SIA President George Scalise. "Sales growth was largely driven by popular consumer products such as cell phones, MP3 players, and HDTV sets - all products that have proliferated as semiconductor technology has enabled dramatically lower costs coupled with improved functionality. According to iSuppli, the semiconductor content of electronic systems - as measured by cost - has been increasing steadily and now stands at 21.6 percent.

"Cell phone shipments exceeded one billion units in 2006," Scalise continued. "The average semiconductor content of a cell phone fell slightly to around $40 last year, mainly due to demand for low-end phones in emerging markets. Growth of cell phone subscriptions in emerging markets continues to be strong.

The SIA noted that favorable economic conditions in the major world markets have contributed to growth of semiconductor sales. "The GDP increase of 3.4 percent in 2006 reflected continuing strength of the U.S. economy, which is the largest market for end products. Consumer spending has been very strong, and consumer confidence is at the highest level since May of 2002. The Asia-Pacific region, in which China is the largest country market, experienced the strongest growth in semiconductor sales with a growth rate of 12.7 percent in 2006."

Posted to the site on 6th February 2007