Worldwide sales of semiconductors grew to $121 billion in the first half of 2007, an increase of 2 percent from the $118.4 billion during the first half of 2006, according to the Semiconductor Industry Association (SIA).

Second-quarter sales of $59.9 billion declined by 2 percent from the $61.1 billion reported in the first quarter of 2007, the SIA said Friday. Sale in June 2007 were $20 billion, a decline of 1.7 percent from the $20.3 billion reported in May.

The major story for the chip industry for the first half of 2007 continues to be rapid price attrition, said George Scalise, president of the SIA. DRAM prices declined nearly 40 percent while unit shipments grew by almost 66 percent year on year, Scalise added.

He said the pattern was similar, if somewhat less dramatic, in the NAND flash segment, especially early in the year.

NAND unit shipments grew by almost 40 percent compared to June of 2006 but ASPs declined by just over 15 percent,' he said. "Recently NAND prices have been stabilizing, and the price decline in June was the smallest we have seen this year.

Continuing rapid price attrition in several important market segments held growth in total semiconductor sales to just over 2 percent in the first half of 2007 despite increases in total unit shipments of almost 7 percent, according to Scalise.

End unit demand in major industry drivers, including personal computers and cell phones is growing in line with forecasts. Together, these two market sectors drive about 60 percent of semiconductor demand, he added.

Sales of personal computers were strong in the second quarter, with unit growth now projected at more than 10 percent for 2007, according to the SIA.

Unit shipments of cell phones are also on track for 10 percent growth, he added.

Chip