Cut-throat flash market slows semiconductor sales

San Jose (CA) - February chip sales declined 6.5% over January, mainly due to falling shipment numbers in some segments and a dramatic double-digit decline NAND flash revenues.

Worldwide semiconductor sales were $20.09 billion, down from about $21.48 billion in January and up 4.2% from $19.28 billion in February 2006.

"While seasonality clearly contributed to the 6.5 percent decline in worldwide chip sales month-on-month, declining unit shipments and lower average selling prices (ASPs) in several key market segments were a factor," said SIA president George Scalise. "Both unit shipments and total sales of microprocessors and DSP chips experienced sequential declines in February. Unit shipments of NAND flash increased sequentially while total sales saw a double-digit decline, indicating very competitive market conditions."

According to Scalise, the semiconductor experiences "fiercely competitive market conditions," which shows increasing unit shipments overall, but a decline in average selling prices (ASPs). "Unit sales of microprocessors were up almost 8% while ASPs declined 15%, and NAND flash units grew by over 40% while experiencing a nearly 50% drop in ASPs," he said.

The SIA also noted that the average fab utilization in the industry declined from about 88.9% in the third quarter of last year to about 86.8% in the fourth quarter. Most of the decrease happened in the foundry utilization, which fell from 91.5% to 80.9%.

Despite the sobering results, Scalise remained upbeat on the state of the semiconductor industry : "Even with the seasonal decline, sales are running ahead of last year’s record pace," he said.