SAN JOSE, CA – Worldwide sales of semiconductors of $63.4 billion for the first quarter of 2008 were 3.8% higher than the same period last year, the Semiconductor Industry Association reported today.

March sales were $21.1 billion, up 3.4% sequentially. Sales declined 5.1% in the first quarter compared to sales of $66.8 billion in the fourth quarter of 2007. SIA said the decline reflects a normal seasonal decline from the historically strong fourth quarter.

“Weakness in memory revenue as a result of rapid price erosion masks the overall strength of semiconductor sales,” said SIA president George Scalise. “Excluding memory products, total semiconductor sales increased by a very healthy 11% year-on-year.

“Sales were buoyed by growing consumer purchases of electronic products in world markets, more than offsetting the effects of a slowing U.S. economy. Although semiconductor sales in the U.S. grew more slowly than overall worldwide sales, revenues in the first quarter of the year still registered growth of 2.3% versus the 3.8% growth worldwide year-on-year.

“According to a new Gartner report, PC unit sales grew by 12% in the first quarter of 2008, reaching 71.1 million units, with strong sales outside the U.S. and slower sales in the U.S. The U.S. market now accounts for approximately 21% of worldwide PC demand – down from over 31% just five years ago. Strength in the PC market was reflected in sales of microprocessors, which increased by 13.4% year-on-year. Average selling prices for microprocessors declined by a modest 3.5% over the past year, while units were up by 17.4%.” Personal computers are the largest single end market for semiconductors, according to the firm.

DRAM prices continued to be under pressure despite healthy growth in bit demand. DRAM sales declined by 37.4% year-over-year despite a 30.6% increase in unit shipments. ASPs declined by 52%, not taking product mix into account, said SIA.

According to Micron Technology, 512Mb DRAM prices declined 73% year-over-year. Total DRAM bit shipments are expected to grow by 56% in 2008, according JP Morgan.

Sales of NAND flash memory revenue grew by 45.9% in the first quarter on unit shipments that increased almost 46% over last year. Prices remain under pressure. According to Micron, ASPs for 8Gb NAND were down 70% from March 2007. SIA noted that NAND flash is widely used in cellphones, MP3 players, digital cameras and other hand-held electronic devices

Unit shipments of cellphones, which account for 20% of semiconductor sales, increased by 14.3% year-over-year. “Emerging markets are driving sales of cellphones, reflecting the rapid expansion of consumer markets in these regions,” Scalise continued.

A recent report from Micron underscores the rapid growth of semiconductor content in consumer electronic products. “Micron noted the memory capacity of a typical PC has more than doubled from 2006 to 2008, to 1,817 MB on average this year,” said Scalise. “The company also reported the DRAM content of a typical handset has tripled from 12 MB to 36 MB, while the NAND content of a handset has increased by more than 1,300% to 412 MB this year.

“Healthy sales of electronic products in world markets continue to drive demand for semiconductors. Global demand is in line with our expectations given current economic conditions, and we remain optimistic for the year,” Scalise concluded.