Global Chip Sales Continue to Rise - TheStreet

Global chip sales increased 8% in June, as the semiconductor business continued to push forward in the face of various economic headwinds.

In its latest monthly report released Monday, the Semiconductor Industry Association, an industry trade group, said that rising energy costs have had little impact so far on demand for the various electronic products that rely on integrated circuits.

"Key demand drives for semiconductors -- especially personal computers, which account for 40% of semiconductor sales, and mobile phones, which drive about 20 percent of demand -- continued to show double-digit unit growth," said SIA President George Scalise.

Worldwide chip sales of $21.6 billion in June were up 0.5% from May -- a smidgeon better than the five-year average of a 0.1% decline between May and June.

In the first six months of 2008, the SIA said chip sales were 5.4% higher than the first half of 2007, in keeping with the modest expectations for the chip industry this year.

The glut of memory chips, and the corresponding freefall in prices for the chips, is hampering the overall growth rate of the chip industry. According to the SIA, the price of 1 gigabit of DRAM memory has declined 43% in the past year, while the price of 2 gigabits of NAND flash has plunged by 61%.

Micron

(MU) - Get Report

and

SanDisk

(SNDK)

, the U.S.'s two top memory makers for DRAM and NAND flash respectively, have seen their profit and share price crushed by the oversupply situation.

Excluding the troubled memory sector however, the SIA said that worldwide chip sales increased 12% in June.

Indeed, while memory chip companies struggle, certain other chipmakers are enjoying solid demand for their products. Last month,

Intel

(INTC) - Get Report

said its second-quarter sales were up 9.2% year-over-year.

Broadcom

(BRCM)

, a maker of communications chips, said sales increased 16.3% year over year to $1.2 billion in the second quarter.

These signs of demand have not carried much weight with investors, who continue to price-in a global recession.

The

Philadelphia Stock Exchange Semiconductor Sector Index

is down 33% from its 52-week high. In midday trading Monday, the SOX was up 3.25 points at 341.3.

With the state of the global economy still uncertain in the wake of the credit crunch and amid rising energy prices, the question is whether chipmakers currently enjoying solid business could soon join their troubled counterparts in the memory sector.