Semi Sales Inch Up

The latest sales figures for the chip industry are at the high end of the seasonal pattern.
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SAN FRANCISCO -- A slight firming in chip prices helped semiconductor sales in July.

Worldwide sales of chips used in products from PCs to cell phones totaled $20.6 billion in July, up 3.2% sequentially, according to the Semiconductor Industry Association, an industry trade group.

The latest sales figures are at the high end of the seasonal pattern for this time of year. During the past five years, chip sales in July have experienced growth ranging from flat to up 3.2%, according to SIA data.

"Major demand drivers for semiconductors -- personal computers, cell phones and other consumer electronic products -- appear to be growing in line with analysts' projections," SIA President George Scalise said in a statement.

While the recent problems in the U.S. subprime mortgage market have raised concerns that consumers might cut back on purchases of electronic goods, Scalise said the impact so far has not been significant.

"This is a concern that bears watching going forward," Scalise added.

The chip industry is just recovering

from an inventory glut that stalled sales and eroded average selling prices earlier in the year, leading the SIA to project that chip sales for the entire year will grow a modest 1.8% in 2007.

While the SIA is not raising its growth forecast for 2007, its latest data indicates that prices for several key types of semiconductors are on the mend.

Unit shipments of microprocessors made by companies like

Intel

(INTL) - Get Report

and

Advanced Micro Devices

(AMD) - Get Report

increased nearly 5% sequentially, while average selling prices ticked up a little more than 3%.

Prices of NAND flash memory -- the chips that store data in MP3 players and digital cameras -- increased more than 8%, resulting in a similar revenue increase.

And while DRAM memory prices continued to decline in July, the rate of decline slowed to less than 2% from June. In the first six months of the year, the SIA has said that DRAM prices plummeted 40%.

The Philadelphia Stock Exchange Semiconductor Sector Index, which comprises 19 semiconductor stocks, was up 1.9% at 507 in midday trading Tuesday.