Semiconductor sales fall as high demand cuts prices

More processors have been shipped, but the costs are dropping

Semiconductor shipments are up seven per cent

Global semiconductor sales fell two per cent in the second quarter of 2007 from the previous three month, due to falling hardware prices.

Despite a seven per cent rise in total unit shipments, revenue dropped from $61bn (£30bn) to $59.9bn (£29.4bn).

'The major story for the chip industry for the first half of 2007 continues to be rapid price attrition,' said Semiconductor Industry Associationpresident George Scalise.

Sales in June alone fell to $20bn (£13.5bn) from $20.3bn (£13.7bn) in May.

High demand for PCs and mobile phones, which account for about 60 per cent of all semiconductor sales, meant that prices dropped.

'PC buyers are continuing to reap the benefits of declining prices for microprocessors and DRAMs, which enable PC manufacturers to offer very powerful systems at attractive prices,' said Scalise.

The average price of a desktop system worldwide has fallen to around $700 (£472), while the memory content of machines has increased by approximately 50 per cent over last year.