Global sales of semiconductors haven risen strongly ahead of the end-of-year shopping season, driven by booming demand for cellphones, computers and electronic gadgets for the living room, a survey said on Monday.
Global September revenues, averaged out over three months to smoothen monthly events, climbed 5.6 percent to $19.6 billion from a year earlier. Revenues were up 5.2 percent from August, according to the World Semiconductor Trade Statistics (WSTS) association.
"The market drivers were personal computers, the communication segment with mobile phones, and digital consumer, as Christmas this year will be dominated by digital devices such as MP3 players, digital TV and DVD recorders," said Patrice Vaslot, vice-chairman for Europe at the WSTS.
The association groups companies representing 85 percent of the world's chip market.
Analysts from investment bank J.P. Morgan said September chip revenues had come in ahead of the normal seasonal increase after the summer, putting the industry on track for at least 8 percent sales growth in 2005 from the record year of 2004, when revenues jumped 28 percent to $213 billion.
"If we have normal seasonally from this point, it would result in close to 9 percent revenue growth," analysts Uche Orji and Jeroen Bos in London said in a note.
Higher revenues would be mostly driven by higher unit growth - more chips sold - and a modest 2 percent increase in prices.
The global chip market grew 6.1 percent in the year to end September, the WSTS numbers showed. Last week, the WSTS forecast 6.6 percent revenue growth this year.
The FTSE Semiconductor index of European chip stocks moved 1.8 percent higher to 179.66, slightly ahead of the 1.6 percent stronger Eurotech index. The chip index is up 4 percent this year.
Both the semiconductor industry and analysts point out that the chips sold in September have been ordered on anticipated, and not yet realised, demand around Thanksgiving and Christmas for flat TVs, hard disk recorders and the latest mobile phones.
"This indicates that manufacturers of devices expect a strong end of the year. Let's hope they are right. The digital consumer is really expected to be the main pillar of Christmas this year," Vaslot said.
The strong September sales, resulting in third quarter revenues that were up 8.9 percent over the second quarter, surprised some of the biggest chip makers such as Intel and Texas Instruments, the world's No 1 and No 3.
Both US-based firms have reported production and inventory constraints, meaning they may not be able to meet demand in the fourth quarter.
So far average selling prices per chip have been flat this year and if the shortage continues prices will rise towards the end of the year.
"Factory utilisation rates are nice and tight. But it will have to continue for a few more months before chip makers are willing to hike prices. There won't be price increases until it's clear what the sell-through to consumers is like," said one London-based analyst, referring to sales of electronics gadgets.
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