The three-month moving average of worldwide sales of semiconductors declined by 21.9 percent in December 2008 to $17.41 billion, compared to sales of $22.28 billion in December 2007, according to the Semiconductor Industry Association (SIA).

This decline was much steeper than the 9.8 percent year-on-year decline reported by SIA for November.

The SIA reports chip sales as an average of the actual sales from the current month and the two previous months. It claims the use of the moving average mitigates variations due to differences in companies financial calendars.

The global economic recession severely dampened semiconductor sales in the fourth quarter of 2008, historically a strong quarter for the industry, said George Scalise, president of the SIA, in a statement.

Weakening demand for the major drivers of semiconductor sales — including automotive products, personal computers, cell phones, and corporate information technology products — resulted in a sharp drop in industry sales that affected nearly all product lines. Once again, the steepest revenue declines were in the memory sector where price pressure more than offset significant growth in total bit shipments.

As consumers worldwide drive over 50 percent of demand for semiconductors, the fortunes of the chip industry are increasingly linked to macroeconomic conditions such as GDP, consumer confidence, and disposable income, Scalise continued. Sales of electronic products held up reasonably well during the first nine months of 2008, but fell sharply as turmoil in the global financial industry unfolded.

The memory content of cell phones and PCs continued to increase dramatically driving large increases in total bit shipments. Over the past twelve months, DRAM content of the typical PC grew by 44 percent to an average of 1.8-Gbytes, while the NAND content of a typical cell phone increased by 244 percent. However, severe price pressure resulted in significant declines in revenues for these product lines, Scalise said.

The industry is currently facing an unprecedented period of uncertainty. A resumption of sales growth will depend in part on the effectiveness of various measures now under consideration by the [United States'] Federal government to restore consumer confidence, improve liquidity, and stimulate economic growth, Scalise concluded.