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Worldwide chip sales in February declined 2.2% from the month before, according to the Semiconductor Industry Association.

Total semiconductor sales in February 2006 were $19.22 billion, down from January's $19.65 billion in sales. Compared with the same month a year earlier however, global chip sales were up 6.8%.

And despite a couple of recent ominous events affecting the PC industry -- namely the delay of



Vista operating system and



massive first-quarter revenue warning -- the SIA said it expects PC sales in 2006 to remain on track. According to the SIA, microprocessor sales in February increased 6.9% year over year.

"The numbers just don't seem to indicate that PC sales are weaker than expected," said SIA spokesperson John Greenagel.

In any case, it is consumer electronics, rather than PCs, that are now the principal driver of semiconductor growth. According to the SIA, the February slowdown in chip sales is due to seasonal patterns in consumer electronic sales.

"There is some evidence of inventory accumulation of semiconductors and finished electronic products during the first quarter of 2006," said SIA President George Scalise in a statement. "We expect the electronic industry supply chain will respond quickly as it did late in 2004 and that inventories will be in balance by the third quarter."

According to the SIA's Greenagel, the buildup pertains mostly to

flash memory chips and is not an indication of an industrywide problem. The SIA maintained its 7.9% overall chip growth estimate for 2006.

The SIA report said demand for cell-phone handsets -- an important market for chips -- was likely to exceed earlier projections of 10% unit growth in 2006, with low-cost phones in China and India accounting for the upside. Last month,



raised its 2006 handset growth estimate to 15% from its earlier projection of 10%.