Worldwide microchip sales rose 6.8 per cent in February - keeping the sector on track for growth of almost eight per cent in 2006 despite some inventory build-up, the Semi-conductor Industry Association (SIA) said.
Total revenue in February was $19.22 billion, up 6.8 per cent from a year earlier, but down 2.2 per cent from January, the SIA added. February is traditionally a weak month after a spike in year-end sales.
The US-based body said that it continued to believe revenues for the $235 billion-per-year industry will grow by 7.9 per cent in 2006.
"There is some evidence of inventory accumulation of semiconductors and finished electronic products during the first quarter of 2006. 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," SIA president George Scalise said in a statement.
Sales of mobile phones appeared stronger than initial 2006 forecasts of ten per cent growth, while personal computer sales are meeting expectations for unit growth of 8 to 10 percent.
The world's biggest mobile phone maker, Nokia, recently increased its forecast for mobile-phone unit sales growth to 15 per cent from an earlier minimum ten per cent growth.
Every year, more than 200 million PCs and more than 800 million mobile phones are sold, together making up about half of total semiconductor demand.
Demand for chips used in cars and industrial applications was also strong, particularly in Europe, said Patrice Vaslot, the vice-chairman Europe for the World Semiconductors Trade Statistics (WSTS) group which compiles the global sales data.
"This reflects the improving economic out-look in Europe," he said.
Analysts said February sales were slightly better than the usual expectations for the slower month of February. The number of chips sold was slightly lower than expected, but this was compensated by higher selling prices per chip than normal.
"If we have normal seasonality in the rest of 2006, semiconductor revenues would be up nine per cent per cent. We maintain our estimate of ten per cent revenue growth for 2006, supported by healthy end-demand, lean inventories and high factory utilisation rates," J.P. Morgan said in a research note.
Philips Electronics, Europe's number three chip maker and the world's number nine, expects chip sales to slip between eight to nine per cent in the first quarter, following the strong fourth quarter.
"That decline is considerably less than we've seen in other years," Philips chief executive Gerard Kleisterlee said at the annual general meeting of shareholders, underlining the strength of the quarter.