SAN JOSE -- Worldwide semiconductor sales in December dropped 2.2% sequentially to $19.95 billion, but beat last year's total by 8.6%, the Semiconductor Industry Association said today.

Worldwide sales of semiconductors set a new record at $227.5 billion in 2005, up 6.8% from 2004. SIA also forecast strong growth for 2006.

Worldwide sales for the fourth quarter were $59.86 billion, up 2% sequentially and 8.6% year-over-year.

In a press release SIA president George Scalise said worldwide demand for semiconductors increased in all end markets, led by consumer electronics.

Fourth quarter PC shipments were up 17% from a year ago, which also boosted chip sales.

The December decline reflected historic seasonal patterns, SIA said.

Capacity utilization continued to increase in the fourth quarter to around 91%, with leading-edge capacity utilization near 97%, SIA said. The trade group estimates total production capacity grew by 10% in 2005.

According to research firm iSuppli excess inventories of microchips fell approximately $0.46 billion below target levels at year end.

Scalise noted that the semiconductor sales data reflect the continuing shift of electronics manufacturing operations to the Asia-Pacific region in general and to China in particular.

“Sales of semiconductors in Asia-Pacific reached $9.3 billion in December, up 20% from December 2004. Asia-Pacific represents 46.6% of the global IC market, and China has become the world’s leading electronics manufacturer.

SIA forecasts that worldwide sales of semiconductors will grow 7.9% in 2006 to $245 billion.

“The outlook for the semiconductor industry remains robust. For the first quarter, we expect sequential change of plus or minus 1%. We expect that the market for semiconductors will continue to grow at a compound annual rate of 10%, Scalise said.

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