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Chip Sales Hit Record Numbers

Chip sales for the month of October are better than they've been in 13 years, according to an industry trade group's report issued Monday.

The Semiconductor Industry Association (SIA) said worldwide sales of semiconductors rose to $15.4 billion in October 2003. That is a 6.8 percent increase from the $14.4 billion recorded in September, and a 23.3 percent rise from October 2002. The gain marks industry revenue growth of 16.4 percent for the current year and is the strongest since 1990.

The San Jose, Calif.-based trade group said October is always a strong month for the industry, but the solid numbers awed SIA President George Scalise

"This exceeds historical norms," Scalise said in a statement. "This growth cycle is dynamic and broadly-based, drawing strength from all geographic markets, all product sectors and all end markets, especially computation, communications and global consumer."

According to the SIA's Global Sales Report (GSR), PCs drove semiconductor growth in October, with DRAMS up 8.0 percent in the month and Microprocessors up 6.6 percent.

"Revised third quarter U.S. GDP growth of 8.2 percent was driven by strong consumer spending of 6.4 percent and an upwardly revised increase of 18.4 percent in business spending on computers and software, providing additional evidence that business investment is now recovering," Scalise said.

The trade group's report also shows the wireless market recorded rising demand and growth, reflecting renewed momentum in China's market, where some 5 million new cell phone subscribers are added each month. In October, the SIA said Flash memory grew 12.7 percent and Digital Signal Processors (DSPs) grew 9.3 percent.

While the global consumer electronics markets traditionally grow briskly in the month, reflecting the holiday buying season, this year, the adoption of new applications and multi-functional devices is supporting that growth, Scalise said. For example, optoelectronics (often used in camera phones) were up 5.2 percent in October and standard cells were up 6.3 percent.

Regionally, the SIA said all geographic markets recorded rising chip sales for October, with Asia Pacific up 6.2 percent sequentially, Japan up 5.9 percent, Europe up 9.3 percent, and the Americas up 6.7 percent.

October's numbers seem to support the industry's forecast for double-digit growth in both 2003 and 2004. The SIA's annual forecast for 2003-2006 suggests global sales of semiconductors in 2003 are on par to increase by 15.8 percent to $163 billion. But more importantly, the trade group is projecting 2004 revenues to increase by 19.4 percent to $194.6 billion. Beyond that, the SIA forecasts a slight market correction of only 5.8 percent growth to $206 billion in sales in 2005, but an upswing back to 6.6 percent to $219.6 billion in 2006.

SIA's Global Sales Report (GSR) is a three-year moving average of sales activity is tabulated by the World Semiconductor Trade Statistics (WSTS). The organization represents approximately 66 semiconductor companies.