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Cell phones drive strong 1Q chip sales

SAN JOSE, Calif.-Worldwide sales of semiconductors increased 13.2 percent to $55.3 billion during the first quarter compared with sales of $48.9 billion during the first quarter of last year, said the Semiconductor Industry Association.

Sales were up 0.4 percent from revenues of $55.1 billion during the fourth quarter.

“Worldwide sales of semiconductors continued to outpace forecasted levels in the first quarter of 2005,” said SIA President George Scalise, who noted that the first quarter is historically relatively weak for the microchip industry. “The unexpected strength of semiconductor sales, with 13-percent growth over a very strong period a year ago, is a good sign for the industry,” he said.

Higher-than-expected sales of wireless handsets, personal computers and consumer electronics drove the positive first-quarter sales news.

“Consumer spending on electronics was stronger than historical patterns for the first quarter despite reports of declining consumer confidence,” said Scalise. “Overall GDP growth of 3.1 percent in the first quarter reflects underlying strength of the U.S. economy, although this number was slightly lower than the 3.5-percent growth expected by some economists.”

Scalise said SIA expects second-quarter sales to be flat to slightly higher than the first quarter. Further, he said a previous forecast of flat sales for the year may have been overly cautious. The group plans to release an updated forecast next month.

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