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The latest figures from the Semiconductor Industry Association (SIA) show that semiconductor sales in December declined by 16.6 percent from November 2008 when sales were $20.9 billion, causing total sales for 2008 to fall by 2.8%. The SIA had previously said in November of 2008 that it expected 2008 sales to reach US$261.2 billion, a 2.2% rise over 2007. Actual sales for 2008, according to the SIA, reached $248.6 billion, impacted by the global economic recession and continuing declines in memory chip prices.

“The global economic recession severely dampened semiconductor sales in the fourth quarter of 2008, historically a strong quarter for the industry,” noted SIA President George Scalise. “Weakening demand for the major drivers of semiconductor sales – including automotive products, personal computers, cell phones, and corporate information technology products – resulted in a sharp drop in industry sales that affected nearly all product lines. Once again, the steepest revenue declines were in the memory sector where price pressure more than offset significant growth in total bit shipments.”

“As consumers worldwide drive over 50 percent of demand for semiconductors, the fortunes of the chip industry are increasingly linked to macroeconomic conditions such as GDP, consumer confidence, and disposable income,” Scalise continued. “Sales of electronic products held up reasonably well during the first nine months of 2008, but fell sharply as turmoil in the global financial industry unfolded.

“The memory content of cell phones and PCs continued to increase dramatically driving large increases in total bit shipments. Over the past twelve months, DRAM content of the typical PC grew by 44 percent to an average of 1.8 gigabytes, while the NAND content of a typical cell phone increased by 244 percent. However, severe price pressure resulted in significant declines in revenues for these product lines,” Scalise said.

On a regional basis, Asia-Pacific sales declined the most (-20.3%) in December, 2008 followed by Europe (-19.6%). Year-to-Year sales comparison saw most regions fall by more than -20%, except Japan, which fell -13.2%.

With sales significantly below SIA’s previous forecast, projections of a 5.6% decline for 2009 could prove optimistic. The SIA said that governments' stimulus packages will in part be a key to any sign of growth in 2009, while the industry will experience an unprecedented period of market uncertainty.