Strong PC sales was one of the key reasons for a strong first quarter in the semiconductor market, according to the 2006 Q1 report from industry body the Semiconductor Industry Association (SIA).

Worldwide sales of semiconductors for Q1 2006 was $59.1bn, a 7.3 per cent increase compared with sales for Q1 2005. Against Q4 2005 sales, Q1 sales declined by 1.3 per cent, which is typical of seasonal demand patterns. March sales hit $19.7bn, up by 2.3 per cent over February.

Unit sales of PCs increased by 13 per cent in Q1 2006, compared with the same quarter of 2005.

George Scalise, SIA president, said: “Competition in the PC market was very intense in the first quarter of 2006. This means that consumers are finding extremely powerful notebook and desktops at very attractive prices.

“Microprocessor sales in Q1 2006 were $8.83bn, compared with $8.28bn in 2005, an increase of 6.8 per cent. There is evidence that PC prices are declining more rapidly than the historic rate of about 10 per cent a year. Once again, consumers are reaping the benefits of Moore’s Law in action.”

The SIA also noted that inventory in the supply chain for certain products is on the rise as manufacturers prepare for expected market growth.

“End-user demand, capacity utilisation and inventories are the most critical factors affecting industry growth,” Scalise said. “End-market demand remains generally strong, and capacity utilisation continues to be more than 90 per cent. We will watch the inventory situation closely, especially in market segments for consumer products.”

In the memory chip market, where both DRam and Flash prices are starting to pick up, Micron has agreed a deal with Photronics worth $135m to create a new company called MP Mask Technology Center.

The new company will develop and produce photomasks for leading-edge and next-generation semiconductors. The move represents a significant drive by Micron to become a leading player in the semiconductor production process.

Mark Durcan, chief operating officer at Micron, said: “The combined expertise of Micron and Photronics in the areas of advanced photomask technology development and fabrication will allow us to meet demands for increasingly high-density, low-power semiconductor devices.”

martin_lynch@vnu.co.uk