Chip sales still solid, but below seasonal norm

Sales of semiconductors in November indicate that consumer products such as LCD (liquid crystal display) TVs, digital music players and other devices sold well during the holidays, the Semiconductor Industry Association (SIA) has said.

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Sales of semiconductors in November indicate that consumer products such as LCD (liquid crystal display) TVs, digital music players and other devices sold well during the holidays, the Semiconductor Industry Association (SIA) has said.

November chip sales rose 2.3% year-on-year to $23.1bn (£11.5bn at standard conversion rates), the SIA said.

Unit demand has far outpaced last year. But falling chip prices have hurt industry revenue, the chip association said. For example, DRAM (dynamic RAM) bit shipments grew 25% in the three months to mid-December, but average selling prices have declined 20% over the same period.

The association also noted that rising energy prices and concerns about the sub-prime lending issue in the US do not appear to have had a significant impact on consumer spending for the holidays, the SIA said.

The group reiterated its forecast that worldwide semiconductor sales will reach a new record in 2007. But it will take a stronger than expected December selling season to reach the 3.8% growth goal the group had forecast earlier this year, the SIA said.

Investment banking firm Credit Suisse was not as optimistic as the SIA.

The November data was below normal seasonal trends, noted analyst John Pitzer, in a report on Monday. Even if December reaches its normal seasonal growth, 2007 industry revenue will only reach $255.7bn (£127.8bn), up 3.2% over last year. The growth percentage would fall short of the SIA's 3.8% target.

The slow November prompted Credit Suisse to lower its 2008 chip industry revenue forecast to 9.4% year-on-year growth, down from a previous target of 13%.

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