Sales of mobile phone chips maintained their booming pace, helping total chip sales rise to $58.9bn, down 0.3% from the previous quarter.

PC chip sales also were strong, rising 10% during the second quarter from last year. However, PC prices weakened, thanks to intense pricing rivalry. The SIA noted the average price of notebook chips fell 18% year-over-year.

The overall average selling price of microprocessors tends to hold, and the fact that it’s down this year reflects both the inventory correction and the competitive pressures in that segment, said SIA president George Scalise, on a conference call.

The US reflected the global trend: the average notebook price fell from $1,141 a year ago to $938 in this year’s second quarter, according to research firm Current Analysis.

Two microprocessor makers are to blame for this trend: No. 1 Intel Corp and its smaller chief rival Advanced Micro Devices Inc. The pair has engaged in tough pricing tactics for the past 18 months or so. The effects of the prolonged pricing wars took their toll on both companies’ most recent quarterly earnings.

And the situation likely won’t be resolved any time soon: Intel is currently launching its full line of PC and notebook chips based on its new microprocessor architecture, and flushing out the channel with its older chips by slashing their prices. AMD has answered with bargain-basement prices of its own.

Research outfit iSuppli Corp recently warned that excess stockpiles of PC microprocessors and core-logic chipsets has created a larger-than-expected glut of inventory in the global electronics supply chain during the second quarter.

Excess inventories have exceeded the worrying levels seen during the last semiconductor supply snafu in mid 2004, said iSuppli analyst Rosemary Farrell, in a statement.

However, with most of the excess inventory restricted to PC- related chips, and mainly to a single supplier Intel – the surplus stockpiles are not a major concern for the global electronics industry.

The total excess stockpile in the second quarter rose a shopping 77.6% to $2bn, far more than the more moderate $1.3bn that iSuppli had initially predicted.

Of course, all this is good news for PC buyers, who can expect to continue to pay less for lower-end machines.

In other market segments, including cell phones and, both unit shipments and prices were strong.

Communications applications grew at a very steady pace year over year – that market represents a quarter of total demand in the industry, SIA’s Scalise said.

Unit demand for cell phones in the quarter just ended was 235 million units and is expected to grow over 4% this quarter and at least 10% next quarter, with total cell phone demand this year nearing the 1 billion unit mark.

Regardless of the mixed end-product markets, Scalise said the outlook remains positive.

Despite the current uncertainties in the global economy, driven by geopolitical issues in the Middle East, higher gas prices at the pump and inflation fears, I remain confident that sales will reach record high levels this year as previously predicted, he said.

Geographically, Asia Pacific was the fastest-growing market for semiconductors in June, with a 12.8% increase in total sales. The Americas closely followed with 11.4%. Japan trailed with 6.5% growth.

Asia Pacific also was the only region where the average sale prices of chips did not drop. Indeed, chip sales edged up 2.5% during June, according to the SIA.