Worldwide chip sales in January slowed from a month earlier, but not by as much as is usual for the first month of the year.

Chip sales totaled $19.66 billion in January, according to data released by the Semiconductor Industry Association Thursday. Sales were down 1.5% from December 2005, but narrower than the average drop of around 2.2%, according to the SIA.

"The new year got off to a good start for the global semiconductor industry with strong year-on-year growth in a historically weak month," said SIA President George Scalise in a statement. "Retail sales, including consumer electronics products, were relatively strong in January and helped dampen the expected seasonal decline in sales."

The report comes a few days before several chipmakers are slated to deliver financial updates. Texas Instruments ( TXN) and Altera ( ALTR) will each provide midquarter financial updates on March 6. National Semiconductor ( NSM) will report its fiscal third-quarter results on March 9.

Semiconductor sales in January grew 7% compared with the same month a year earlier, according to the SIA report -- a more moderate growth rate than in the past. In January 2005, for instance, worldwide chip sales were up 18.2% year over year.

The SIA report also noted that factory utilization increased from 90% to 92% in the fourth quarter of 2005. Utilization of leading-edge manufacturing capacity, which produces the most-advanced chips, grew from 97% to 99%.

While capital spending was essentially flat industrywide in 2005, the SIA said it expects spending to increase 4% to 6% in 2006.

This kind of moderate growth, which is in line with semiconductor-demand projections, should prevent excess inventory problems, Scalise said.

"There are no excess inventories, end-market demand remains strong, and capacity-utilization rates are very high. There are signs of recovery in the market for networking equipment, and reports from manufacturers of personal computers and cell phones reflect continued optimism.

Scalise said he expects total chip-market sales to change plus or minus 1% sequentially during the current quarter.