September Chips Sales Rise 9.3%

Consumers keep driving sales.
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Worldwide chip sales in September increased 9.3% from the year before, thanks to strong consumer demand for electronic devices.

According to the Semiconductor Industry Association, total chip revenue in September reached $21.4 billion. The industry group pointed to demand for cell phones, MP3 players and PCs as the biggest growth drivers of chip sales, as electronic-equipment manufacturers geared up for the fourth-quarter holiday season.

Total chip sales increased 4.2% from August, according to the SIA.

DRAM memory chips used in PCs were especially strong, posting 40% year-over-year sales growth and 10% sequential growth.

SIA said DRAM growth reflected tightening supply and rising bit demand, fueled by new PCs designed to run

Microsoft's

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forthcoming Vista operating system, which requires greater amounts of memory.

Microprocessor revenue was up 4% sequentially, but down 11% from the year before, as the price war between

Intel

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and

Advanced Micro Devices

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continued to pressure average selling prices, despite rising unit sales of microprocessors, SIA said.

Sales of cell phones remained strong, especially in India and China, said SIA President George Scalise.

Last month,

Texas Instruments

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attributed a

falloff in chip orders to a shift in demand to low-end phones sold in developing economies at the expense of the higher-priced, feature-rich handsets.

"The expectations will be more weighted toward the low end than previously anticipated," TI CFO Kevin March said in an interview at the time, stressing that the company has not seen any overall drop in demand for cell phones.

During the third quarter of the year, chip sales totaled $61.4 billion, up 8% from the second quarter's $59.3 billion, the SIA said.

SIA's Scalise said chip sales are on pace to meet the group's forecast for 9.8% revenue growth in 2006, thanks to robust consumer demand in the seasonally strong fourth quarter.