Chip sales gained momentum in August, as the approaching holiday season juiced demand as prices for flash memory perked up. Worldwide semiconductor sales totaled $21.6 billion in August, up 4.9% from July, according to the industry group Semiconductor Industry Association. The sequential sales growth was the highest in the past five years, although the year-over-year growth rate was a more moderate 4.5%. SIA President George Scalise said that normal seasonal patterns, namely the start of the period in which electronics makers begin building products for the holiday sales season, contributed to the pick-up in chip sales in August. And demand for electronics continues to be strong, with PCs -- which account for roughly 40% of all chip sales -- and cell phones both outpacing initial sales forecasts, Scalise said. Shares of Intel ( INTC) and Texas Instruments ( TXN), the largest chipmakers for PCs and cell phones, respectively, are up 29% and 27% since the start of the year. "The semiconductor industry will continue to outpace overall economic growth with consumer demand leading the way," Scalise said in a statement. According to the SIA, NAND flash memory chips led the industry's growth in August, as supplies tightened and prices firmed. Sales of NAND flash chips -- which are found in everything from MP3 players to cell phones -- were up 48% year over year and 19% sequentially in August.
The NAND business has been battered for most of the year by plummeting prices and a glut of supply. A power outage at Samsung, the world's No.1 maker of NAND flash chips, shut down its production line for a day in early August, easing the oversupply of the chips somewhat. Meanwhile, a new crop of iPods from Apple ( AAPL), as well as the introduction of its much hyped iPhone, are shoring up demand for flash memory chips. The Philadelphia Stock Exchange Semiconductor Sector Index, which comprises 19 semiconductor stocks, was recently up 1.6%.