The lackluster report comes during the crucial holiday sales season and threatens to dampen what is already expected to be a slow year for the industry.

"While total semiconductor sales continue on pace to surpass the record level of 2006, it will take very strong sales in December to meet our forecast of 3.8% growth in 2007," said Semiconductor Industry Association President George Scalise in a statement.

According to the SIA, global semiconductor sales in November totaled $23.1 billion, up 0.7% from October, and up 2.3% on a year-to-year basis.

At this time last year, global chip sales increased 3.1% from October, and 11.3% year to year.

The culprit for this year's lower sales growth appears to be falling prices, particularly for memory chips. In the three months leading to mid-December, the SIA said that bit shipments of DRAM memory chips increased 25%, while prices fell 20%.

The SIA said that rising energy prices and concerns about subprime lending issues do not appear to have had a significant impact on consumer spending on electronic products during the holiday season.

And the group stressed that early indications are the consumer electronic products like flat panel TVs, MP3 players and digital cameras sold well during the holidays.

Sales of PC microprocessors, made by Intel (INTC) and Advanced Micro Devices (AMD), increased 5.8% from October to November, while average selling prices increased 3.2%, the SIA said.

Chipmakers' stocks have been under pressure for months, as investors fret that a potential U.S. recession in 2008 could cause consumers to stop buying electronics products. A poor holiday sales season could reverberate into the new year for chipmakers, as customers work off existing inventories instead of placing new orders.

By: DocMemory
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