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World chip sales continue to rise

Slow but steady gains

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The world's electronics manufacturers spent $18.4bn on semiconductor products during March, 2.2 per cent more than they did in February, the US Semiconductor Industry Association (SIA) said yesterday.

For the first calendar quarter, sales reached $55.3bn, just 0.4 per cent sequentially - Q4 2004's total was $55.1bn - though they were up 13.2 per cent year on year from $48.9bn. Sales in March alone were up 14.7 per cent year on year.

The year's first quarter is usually a weak one, but stronger-than-expected consumer spending helped lift sales to the levels the SIA reported. The organisation pointed to "higher-than-expected sales of wireless handsets, personal computers and consumer electronics... despite reports of declining consumer confidence".

Q2's sales will be flat or slightly up compared to Q1's total, the SIA forecasts. It has yet to publish a revised forecast for the year's sales as a whole, but it continues to believe past predictions of flat 2005 sales are "overly cautious".

With market watchers like iSuppli forecasting the resolution of the industry's inventory glut during Q2, the scene is set for bigger sequential gains come Q3 and beyond.

That said, others, such as Advanced Forecasting, claim Q3 will similarly show only a very small improvement over Q2. The double-digit year-on-year gain seen in Q1 "will not be long lasting", it said. ®

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