Global Chip Sales Hit Record In 2006Global Chip Sales Hit Record In 2006

Worldwide semiconductor sales hit a record $247.7 billion last year, marking an increase of 8.9% over 2005.

The Semiconductor Industry Association (SIA) predicts that global semiconductor sales will jump by 10% to hit $273.8 billion this year. The 2006 sales numbers came in within 0.4% of the association's prediction of $248.8 billion. The results were tabulated by the World Semiconductor Trade Statistics organization, which represents approximately 66 companies.

Global sales in December came in at $21.7 billion, an increase of 9% from the same month the year before when sales hit $20 billion, according to figures from. December's sales numbers were down, though, from the month before. SIA reported that November sales rang in at $22.5 billion.

Worldwide semiconductor sales in the fourth quarter were $65.2 billion, an increase of 9% over fourth-quarter 2005 sales, which came in at $59.9 billion, and an increase of 1.9% over third-quarter 2006 sales, which were $64 billion.

Last year "was the Year of the Consumer in the electronics industry," SIA president George Scalise said in a written statement. "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 surpassed 1 billion units last year alone. Scalise noted, however, that the average semiconductor content of a cell phone fell slightly to around $40 last year. That's largely because of the growing demand for low-end phones in emerging markets. The MP3 player market, though, is doing its part to make up for that.

Scalise pointed out that more than 34 million MP3 players were sold in the United States in 2006. "While the growth rate for MP3 players is likely to slow going forward, the semiconductor content of these devices is growing as a result of increased storage capacity and addition of new functionality such as video capability," he added.

And while PC shipments worldwide had a slower growth rate last year, they continue to account for a significant portion of semiconductor consumption, the association reported. About 235 million units were shipped last year. Scalise puts the slower growth rate to high computer penetration in some developed countries.

The SIA also noted that strong consumer spending has helped to push semiconductor sales.

"The GDP increase of 3.4% in 2006 reflected the continuing strength of the U.S. economy, which is the largest market for end products," said Scalise. "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% in 2006."