While many businesses are still dealing with the aftermath of the global recession, the semiconductor industry is poised for a rebound as demand for PCs and cell phones drives chip sales.
Worldwide chip sales increased 47.2 percent from January 2009 to January 2010, according to the Semiconductor Industry's Association's March 1 report. In January 2010, chip sales totaled $22.5 billion compared to $15.3 billion in January 2009.
In a typical year, chip sales fall between December and January when the holiday shopping season ends and consumers cut back on their spending. In 2010, however, SIA found that chip sales increased about 0.3 percent between December 2009 - $22.4 billion - and January 2010 -- $22.5 billion.
Consumer demand for laptops, desktops, cell phones and smartphones is helping to drive the global semiconductor market, according to SIA. In addition, chips sales were helped by better-than-expected automobile sales.
"We are currently seeing strength across a range of demand drivers for semiconductors, including personal computers, cell phones, automobiles and industrial applications," SIA President George Scalise wrote in a statement.
If consumers and businesses keep buying PCs and handheld devices, and the global economy rebounds later in 2010, SIA could revise its November forecast, which called for chip sales to reach $242.1 billion this year.
With this in mind, many of the larger chip makers are gearing up to offer a number of new, enterprise-class processors. In February, IBM released its Power7 processor for high-end systems, while Intel released the latest version of its Itanium chip.
On Feb. 22, Advanced Micro Devices said it planned to start shipping its 12-core "Magny-Cours" Opteron processors to certain customers before beginning a full-scale rollout by the end of the quarter.
In addition to the SIA report, iSuppli released its own chip forecast on March 1.
The iSuppli report concluded that demand for memory chips, including DRAM (dynamic RAM) and NAND Flash, which is used primarily with MP3 players and solid state drives (SSDs), will see a nearly 100 percent revenue increase during the first quarter of 2010.
The demand for DRAM and NAND memory is being driven by two factors: Chip manufacturers keeping inventories in check, and the increasing demand for smartphones that have greater and greater capabilities.