January Chip Sales up 7 Percent Over 2005

SAN JOSE, Calif. – March 2, 2006– Worldwide sales of semiconductors of $19.66 billion in January were 7 percent higher than January of 2005 when global sales were $18.38 billion, the Semiconductor Industry Association (SIA) reported today. January sales reflected a 1.5 percent sequential decline from the $19.95 billion reported in December. SIA noted that global semiconductor sales in January historically show an average sequential decline of 2.2 percent following the seasonally strong fourth quarter.

“The new year got off to a good start for the global semiconductor industry with strong year-on-year growth in a historically weak month,” said SIA President George Scalise. “Retail sales, including consumer electronics products, were relatively strong in January and helped dampen the expected seasonal decline in sales. The industry entered the new year in a healthy condition. There are no excess inventories, end market demand remains strong, and capacity utilization rates are very high. There are signs of recovery in the market for networking equipment, and reports from manufacturers of personal computers and cell phones reflect continued optimism.”

SIA noted that overall capacity utilization increased from 90 percent to 92 percent in the fourth quarter of 2005. Utilization of leading-edge capacity (defined as facilities capable of producing 0.12-micron and finer geometries) increased from 97 percent to 99 percent. “Industry capital spending was essentially flat in 2005, and recent forecasts indicate that capital expenditures will grow between 4 and 6 percent in 2006,” said Scalise. “With capacity expansion in line with expected growth in demand for semiconductors, we do not foresee any excess capacity issues in 2006.

“We continue to project a sequential change in the total market of plus-or-minus 1 percent for the current quarter,” Scalise concluded.

The SIA’s Global Sales Report (GSR) is a three-month moving average of sales activity. The GSR is tabulated by the World Semiconductor Trade Statistics (WSTS) organization, which represents approximately 66 companies. The moving average is a mathematical smoothing technique that mitigates variations due to companies’ financial calendars.

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About the SIA
The SIA is the leading voice for the semiconductor industry and has represented U.S semiconductor companies since 1977 and SIA member companies comprise more than 85% of the U.S. semiconductor industry. Collectively, the chip industry employs a domestic workforce of 225,000 people. More information about the SIA can be found at www.sia-online.org.

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