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Consumer gadgets fuel chip sales

Worldwide chip sales rise 9.4 percent from a year ago, reflecting strong demand for cell phones and digital cameras.

Global semiconductor sales grew to $19.7 billion in May, up 9.4 percent from a year ago, according to a new report.

Analog chips and digital signal processors, both used in cell phones, were direct contributors to the growth, according to the report from the Semiconductor Industry Association (SIA).

"Consumer products drive an increasing proportion of microchip sales," SIA President George Scalise said in a statement. Strong growth in NOR flash memory and optoelectronic devices also indicates that sales of digital cameras and cell phones will continue to rise, Scalise said.

Analog chip sales grew 21.5 percent from May 2005 to May 2006, the report said, and digital signal processor sales grew 13.7 percent over the same period.

Sales of PC processors declined 2 percent in the same period, an indication of inventory correction and greater competition, said Scalise. He also noted that consumers will benefit since the increased competition has put the average selling price of a notebook computer at $1,000.

In the United States, overall chip sales were up by 9.6 percent, jumping from $3.2 billion in May 2005 to $3.5 billion in May 2006. The Asia-Pacific region, which includes predicted chipmaking leader China, exhibited the most growth, leaping from $8 billion to $9.2 billion in the period--a 15 percent increase.

In June, the SIA raised its 2006 global forecast for chip sales growth from 7.9 percent to 9.8 percent. The SIA, which is based in San Jose, Calif., represents U.S. chipmakers.