New numbers claim chip sector on road to recovery. (First in / first out).

In a late Christmas gift to the chip sector, on December 30, 2002, the Semiconductor Industry Association (SIA) reported increased chip revenue and indicated that chipmakers are well into the recovery process.

"The November sales of the global chip industry underscore the healthy recovery that has been building momentum throughout this year," SIA President George Scalise said. "The wireless sector continues to be the strongest single market." (The SIA is a trade group whose member companies comprise more than 90 percent of US-based semiconductor production.)

According to SIA numbers, global semiconductor sales reached $12.68 billion in November 2002, representing a 1.3 percent sequential increase from the $12.51 billion in revenue reported in October 2002. The rise continues the upward sales trend that began in the fourth quarter 2001.

In another encouraging statistic, SIA has found that November sales were up 19.6 percent from the bleak November 2001 sales, which were $10.60 billion. And in even more good news, the SIA indicated that wireless networking--a sector that analysts agree is critical to any industry-wide recovery--is leading the way. The growth in wireless is also having a ripple effect on other markets, which is important for overall growth in the industry.

According to SIA's report, the semiconductor products that benefit from the strength of the wireless sector are led by flash and Digital Signal Processors, which were up 6.6 percent and 3.7 percent, respectively, in November. In addition, Wi-Fi has begun to contribute to the strength of the market, and the PC segment also showed growth, with microprocessors up 0.5 percent and DRAM up 5.8 percent.

While SIA's numbers sound promising, not all analysts see growth in wireless semiconductors, or at least not in all areas. Alan Nogee, senior analyst for wireless component technology at Cahners In-Stat MDR, believes that 2002 base station semiconductor revenue will be $2.48 billion, down from 2001's $2.59 billion. By 2006, Nogee expects base station semiconductor revenue will be down to $1.41 billion, a drop of over a billion dollars compared to 2002.