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Global chip sales on recovery road

The market for semiconductor chips is showing definitive signs of recovery and growth worldwide, according to a new industry forecast from Gartner.

Global markets for semiconductor chips are showing definitive signs of recovery and growth, according to a new industry forecast.

Gartner said Monday that the worldwide semiconductor market should reach $173 billion in 2003, compared with $156 billion last year, an 11.2 percent increase.

That lines up with predictions the Semiconductor Industry Association issued earlier this month. The SIA forecast a growth rate of 10.1 percent for 2003, with worldwide sales reaching $12.54 billion in June, up from $ 12.49 billion in May. The growth was led by higher sales in Japan and the Asia-Pacific region, according to the SIA.

Market conditions have improved in the past few weeks. In device markets, inventories are back to normal levels, pricing has stabilized and in some cases, there are shortages of critical components, Gartner reported. The market for digital cellular handsets remains robust, and demand for consumer-electronics gear has not waned.

In front-end semiconductor manufacturing, silicon demand is increasing. Total usage of wafer manufacturing plants now exceeds 80 percent, and foundry wafer pricing has become more stable.

There are early signs of demand for PCs picking up among corporate buyers, according to Richard Gordon, Gartner?s research vice president.

"It is becoming increasingly likely that the long-awaited corporate PC replacement cycle will be characterized by incremental increases in (information technology) spending," Gordon said in a statement.

"Excess capacity in the telecommunications sector also remains a concern that could postpone the return and inhibit the level of telecommunications industry capital spending in the medium-to-long term," Gordon said.