FRANKFURT, Aug. 24 -- Dismissing fears of an impending downturn, Gartner Dataquest last week inched up its 2004 forecast for global semiconductor sales. 

The reseach firm predicts revenues will grow 27% this year, to $226 billion. Gartner previously forecast growth of "more than 25%."

The report followed on the heels of an improved outlook for semiconductor tools from the trade group SEMI. It is not clear, however, whether Gartner's report takes into account a recent announcement that Intel Corp. will slash pricing by up to 35%. 

In a statement, Gartner said concerns that rising inventories in the supply chain were overstated. "Had the increased inventory been accompanied by a flat or even falling semiconductor market, it would have been of grave concern. In a rising market, increasing inventory levels are normal.

Gartner's research vice president Richard Gordon acknowledged the industry still harbors jitters from the last downturn. "Despite the improving market conditions that semiconductor vendors have enjoyed over the past several quarters and the expectation that revenue growth this year will be close to 30%, this industry upcycle is notable in that few in the industry have felt able to acknowledge it as a boom."

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