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By | Tony Smith 1st February 2006 11:08

Chip price slide steepens, analyst says

But demand still strong

Chips and other electronic components will become 3.3 per cent cheaper by the end of March, making for the third consecutive quarter of accelerating average selling price reductions, market watcher iSuppli said yesterday.

Last quarter, Q4 2005, electronic component average selling prices fell 2.2 per cent, after declining just 1.1 per cent in Q3 2005. For the year as a whole, prices fell on average three per cent per quarter.

However, Q1 2006's fall is a shallower reduction than the one seen in Q1 2005, when ASPs fell 4.7 per cent.

Despite the increasing size of the quarterly ASP decline, there's no sign of a slump. According to iSuppli, demand remains strong after a "robust" final quarter of 2005, putting the breaks on faster price-decline acceleration.

"Consumer confidence is up, along with most global stock markets," iSuppli analyst Sang Park said. "The general perception that the risk of a global recession has been averted is helping to stimulate worldwide demand for electronic products."

Falling prices, he added, are helping open new markets.

The overall decline in ASPs comes despite rising DDR 2 SDRAM prices as demand outstrips supply. However, iSuppli said it doesn't expect significant shortages during the quarter - only Flash supplies remain constricted, it said. ®

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