Chip Outlook Brightens

Worldwide semiconductor sales increased slightly in January, a result of stronger demand across the tech industry, a trade group reported.

Sales in January rose by 0.3 of a percent from December to $22.5 billion, the Semiconductor Industry Association said. When compared to January 2009, the height of the economic downturn for the tech industry, sales soared 47.2%. A year ago, the semiconductor industry saw only $15.3 billion in sales.

SIA President George Scalise said the dramatic difference year-to-year reflects an improving business environment for the industry.

"January and February of 2009 were the low point of the industry downturn as the semiconductor industry and electronics manufacturers quickly responded to the global economic recession," Scalise said in a statement issued Monday. "We are currently seeing strength across a range of demand drivers for semiconductors, including personal computers, cell phones, automobiles, and industrial applications."

If the current sales trend continues, the industry could see growth this year surpass the SIA's forecast of $242.1 billion. However, Scalise cautioned that "a growing global economy driven by consumer purchasing will be key to sustaining these trends."

The SIA's current 2010 forecast is conservative compared to some industry analysts. Gartner predicts global chip revenues this year will rise by nearly 20% from 2009 to $276 billion; iSuppli predicts a 21.5% increase to $279.7 billion.

Driving the growth are rising DRAM and NAND flash prices.

DRAM, or dynamic random access memory, is the system memory used primarily in PCs and servers. Strong revenue growth predicted for this year stems from suppliers' deft management of manufacturing capacity, which will keep inventories in check and prevent prices from eroding, iSuppli said.

Sales in NAND flash memory are expected to rise as a result of growth in the smartphone market, which is expected to generate an "insatiable demand," iSuppli said in a research note. As a result, tight supplies are expected to help boost prices.