Global chip sales rose 6.8 percent in February compared to the same time a year ago, led by stronger than expected mobile phone shipments and normal PC demand, the Semiconductor Industry Association (SIA) said Monday.

The year-on-year increase shows a healthy technology market, and indicates chip growth forecasts for this year could be nearly on target.

Worldwide chip sales rose to US$19.22 billion in February, SIA said, which is a historically weak month for semiconductors due to a slowdown in consumer electronics purchases and fewer days. Last year, chip sales reached $17.98 billion.

The industry trade group highlighted strong mobile phone sales as a driver of chip growth, predicting that forecasters will have to revise their views for 2006 thanks to strong demand for low-cost handsets in China and India. PC sales appear to be on track for the 8 percent to 10 percent growth forecast for the year, based on chip sales data, SIA said.

The association reiterated its prediction of 7.9 percent global chip sales growth for this year.

In a note of warning, however, SIA highlighted evidence of an inventory build-up of semiconductors and finished electronics gadgets during the first three months of this year. But the group said it expects the industry to correct the situation quickly.

The data showed the chip season is humming along normally for the time of year, said Michael Masdea, chip industry analyst at Credit Suisse Group in San Francisco, Calif., in a Monday report.

"We believe recent worries in the semiconductor industry of inventory build, demand fall-off and/or a repeat of the (second half of 2004) correction are overblown," he wrote. The industry is in a sustained, but muted upturn, he added, and fundamentals in the industry remain solid and show steady improvement.

The Americas led in chip sales growth in February, up nearly 18 percent year-on-year, while the Asia Pacific showed 14 percent growth compared to last year, SIA said. Chip sales to Europe and Japan in February were down compared to last year.

-Dan Nystedt, IDG News Service

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