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Global Chip Sales Rise 10% During 2nd Quarter

August 05, 2003|Terril Yue Jones | Times Staff Writer

Worldwide sales of semiconductors, a key yardstick for gauging the health of the technology sector, rose more than 10% in the second quarter from a year earlier, suggesting that the industry could pull out of its prolonged slump this year.

Semiconductor sales reached $37.6 billion in the three months ended June, up 10.4% from the same period a year earlier and up 3.2% from the previous quarter, the Semiconductor Industry Assn. said Monday in its quarterly report on the chip industry.

"The fundamentals for the industry are improving," said Doug Andrey, the association's principal analyst, noting that the second half usually is much stronger because of back-to-school and holiday sales.

Semiconductor sales plunged 32% in 2001 and grew only 1.3% in 2002.

But the San Jose-based association said it expected a widespread move by corporations to replace personal computers in the coming months. Many companies bought PCs in the late 1990s to prepare for the so-called Y2K bug, and industry watchers say those machines are now breaking down.

Legions of corporate PCs "are reaching the point where they fail mechanically, and it's less expensive for companies to replace the computers than to try and upgrade their hard drives," Andrey said in a conference call. "We're looking for this to start sometime before the end of the year."

Global PC sales rose 8% in the second quarter compared with those a year earlier, Andrey said.

Martin Reynolds, a senior analyst with the technology research firm Gartner Inc., shared the association's optimism. "I believe we are seeing signs of a recovery," he said.

"We're seeing [information technology] directors willing to spend more money, and semiconductors piggyback on that," Reynolds said. "It feels like everything's aligning in a positive direction."

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