Global chip sales rise in May, group says

SIA says chip sales rose in May led by mobile phones, despite slumping DRAM prices.

Global semiconductor sales rose in May due mainly to a blistering mobile phone market, according to the Semiconductor Industry Association (SIA).

Chip sales rose to US$18.05 billion in May, up four percent from US$17.34 billion during the same month last year, SIA said. Strong monthly sales growth should help pace overall growth for the worldwide chip industry in 2005. A number of market researchers and organizations like SIA boosted their full year forecasts for the chip industry in recent months.

Last month, the group forecast global chip industry would reach record sales of US$226 billion in 2005, up 6 percent from last year. It had previously predicted no growth for chips this year.

"Unit sales of cell phones have continued to outpace earlier forecasts, contributing to growth in sales of semiconductor products such as DSPs (digital signal processors) and analog chips, said George Scalise, president of SIA, in a statement.

However, slumping prices for DRAM (dynamic random access memory) chips dragged down the sector in May. Global chip sales fell by half a percentage point in May compared to April sales of $18.14 billion, the second consecutive monthly decline caused by falling DRAM prices.

The May-June time frame is normally among the weakest for DRAM due to a lull in the personal computer industry as companies begin planning for back-to-school and holiday sales in the second half of the year.

On the DRAM spot market, prices of the most widely used chips, 256M-bit DDR (double data rate) DRAM that run at 400MHz tumbled to their lowest price of the year on May 23, at US$2.25 per chip, compared with US$4.04 at the start of the year, according to DRAMeXchange, an online clearinghouse for the chips. The bad news for computer buyers is the chips have rebounded nearly 8 percent to US$2.42 by early Monday, and many people in the industry expect prices to continue to rise in the second half of the year.

"We feel that prices bottomed in June and will bounce back strongly," said Albert Lin, a vice president at DRAM maker ProMOS Technologies in Taiwan. "I still think this will be a profitable year for DRAM," he added.

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