Intel (INTC) - Get Report, AMD (AMD) - Get Report and other chipmakers were prepared to sit out the holiday season this year during one of the most pronounced down cycles in semiconductor history. Last week several chipmakers gleefully spread news of unexpectedly good fourth-quarter fortunes, raising revenue estimates and investor moods. After several quarters of misery, it seems finally something is normal in the chip industry: namely, the end-of-the-year rise in business.

"The best way of thinking about it is that things are getting better," says Credit Suisse First Boston analyst Charlie Glavin, who hasn't done banking for Intel and rates the company a hold. "The degree to which you believe it's getting better is like an ink blot test -- if you're a bull you see it one way, if you're a bear you see it another."

Many chip companies weren't factoring a holiday upswing into their December quarter estimates, so as they increase their revenue guidance, it is a moderate seasonal increase. And revenue that rises in the final quarter of the year, often pull back in the first.

AMD sees revenue growing 10% sequentially to more than $842 million in the closing quarter of 2001, while Intel expects 3% to 6% growth, good for a revenue range between $6.7 billion and $6.9 billion. Intel's good fortune was already factored into its stock price, and its shares have fallen 4% since the update.

AMD's surprise drove its shares up almost 10% to $17.85 on Friday, falling back to an 8% overall gain Monday. "Normal for Intel is 11% growth in the fourth quarter," Glavin explains, saying Intel's share price had gotten ahead of its performance. "Is that seasonal? Q4 is definitely better, but?"

Both companies said increased revenues are coming from higher levels of factory use and higher volumes of chips shipments, illustrating the complexity in the news. Given the laggard state of the chip industry, it doesn't take a lot of nudging to get utilization and volumes up.

On a more promising note, AMD boasted of higher average selling prices for its chips in this tough year for PCs. Intel could not say the same and management warned the Street not to get ahead of itself. Intel said that ASPs had not improved substantially, and that it would likely hit the mid-range of its gross margin guidance, 47%, slightly up from the third quarter's 46% finish.

National Semiconductor's

(NSM)

results for the second quarter of 2002, which ends Dec. 31, delivered the same day, featured comparable characteristics: better revenues than expected and gross margin gains. National boasted of a 20% sequential boost in orders from its best wireless customers, and noted a seasonal surge in PC and display orders, as well. The chipmaker's factory utilization rates climbed from 47% in the first quarter of 2002 to 49.5% in the second quarter, which ended Nov. 30, pushing gross margins to 35.3%, a 3% sequential increase. Keep in mind, however, that last year in the December quarter, National notched 50% gross margins.

Monday, two more chipmakers added smaller voices to the chorus, as

Xilinx

(XLNX) - Get Report

and

Anadigics

(ANAD)

spoke of holiday quarter strength. Xilinx announced that in the third quarter of its fiscal 2002 which ends Dec. 31, gross margins will be up to 53% and revenues will fall 5% sequentially to $213 million -- both of those figures hit the high end of Xilinx's guidance. Xilinx's revenue fell 22% from the first to second quarters of its fiscal 2002.

Little Anadigics reported Monday of increased demand for its mobile-phone products that would help it hit the high end of its wireless revenue predictions, or $13.5 million, for a $20 million to $21 million fourth-quarter wrap up. Anadigics' fourth-quarter seasonal boost will segue, however, into a first-quarter post-holiday slump.

The chipmaker anticipates the first quarter of 2002 will feature substantially lower revenue of $16 million to $19 million, though its loss will narrow from 44 cents expected in the fourth quarter to a range of 38 cents to 42 cents for its first-quarter shortfall.

With demand picking up, even a sliver, chipmakers are basking in a few positive signs. But the data don't show whether the seasonal surge will stack up to years past, or continue on into the first quarter of calendar 2002. Enjoy the uptick, but remember that Christmas comes but once a year.