The world\u2019s two largest contract chip makers, Taiwan Semiconductor Manufacturing (TSMC) and United Microelectronics (UMC), saw their first-quarter sales rise sharply, reflecting strong demand for chips.TSMC\u2019s first-quarter sales totaled NT$77.3 billion (US$2.4 billion as of March 31, the last day of the period being reported), up 39 percent from the same period last year. Rival chip maker UMC saw its sales rise 20 percent during the quarter, to NT$24.4 billion.TSMC\u2019s sales narrowly beat its first-quarter forecast, which was for sales of between NY$73 billion and NT$76 billion. The growth resulted from increased wafer shipments, the company said.Both companies\u2019 figures are based on sales results reported each month under Taiwanese rules for public companies. The full first-quarter figures will be reported later this month.Demand for chips has been generally strong since the second half of last year, said Betty Lin, a semiconductor analyst at IDC Asia-Pacific in Taipei. "We have seen this trend since the late third and fourth quarter last year," she said, noting that chip inventory levels appeared to be low.Demand for chips is expected to remain strong. There is a shortage of production capacity for chips made using 200-millimeter (8-inch) wafers, and supply is beginning to tighten for 300-millimeter capacity, Lin said.-Sumner Lemon, IDG News ServiceFor related news coverage, read Qualcomm Sampling 65-Nanometer 3G Chips\u00a0from TSMC and Carly Fiorina Joins Board of Chip Maker TSMC.Check out our CIO News Alerts and Tech Informer pages for more updated news coverage.