SAN JOSE, CA – Global sales of semiconductors for the first half of 2008 grew to $127.5 billion, an increase of 5.4% year-over-year, the Semiconductor Industry Association reported today.

June sales of $21.6 billion were up 8% compared to June 2007, and up 0.5% sequentially.

Second-quarter sales of $64.7 billion increased 3% sequentially.

Thus far, increased energy costs have had little impact on demand for electronic products that drive semiconductor demand, said the association.

“Continuing strength in international markets – coupled with healthy demand in the U.S. – helped drive higher worldwide sales of semiconductors in June,” said SIA president George Scalise. “Key demand drivers for semiconductors – especially personal computers, which account for 40% of semiconductor sales, and mobile phones, which drive about 20% of demand – continued to show double-digit unit growth. JPMorgan recently revised upward its forecast for unit sales of personal computers to 13%, with sharp increases in sales of portable systems. Forecasts for unit sales growth of mobile handsets range from 10% to 12% for 2008.

”Emerging markets are a major factor in driving worldwide semiconductor sales,” Scalise continued. “PC unit sales in emerging markets are expected to grow by 19% – more than double the growth rate in developed markets this year. In 2008, developing countries – with sales of over 153 million units – will account for half of worldwide PC sales. In mobile phones, developing countries are expected to account for 66% of total worldwide unit sales of over 1.3 billion, up from 61% last year. The emergence of large middle-class populations in China, India, Eastern Europe, and Latin America has more than offset the effects of slower growth in the U.S. economy. We expect demand for consumer electronic products in these new markets will continue to outpace growth in developed markets for the next several years.

“Inventory for the industry is in balance with minor excess in a few product sectors,” Scalise noted.

SIA said total semiconductor sales in June, excluding memory products, grew 12% year-over-year. Price attrition in memory products contributed to a 6% year-over-year decline in total memory sales, despite sharply increased unit sales.

“Advances in semiconductor technology continue to deliver huge benefits to consumers, as semiconductor devices deliver higher performance and increased functionality at lower cost,” said Scalise. “At the same time, rapid price declines for microchips tend to mask the real growth of the industry. The cost of 1 gigabit of DRAM has declined by 43% during the past year, while the price of 2 gigabits of NAND flash has declined by 61% in the last 12 months. Lower prices enable increased memory content in consumer devices. Micron estimates the memory content of the average PC will increase at least 50% this year, while the memory content in the average cellphone will increase by more than 150%.”

During the past 10 years, the price of a typical desktop PC has declined by nearly two-thirds, while performance and functionality have increased by a factor of more than a hundred, said Scalise. “The impact of advanced technology on energy efficiency is even more dramatic,” Scalise said. “A recent independent study showed computers have become nearly three million percent more energy-efficient over the past 30 years,” he concluded.