SAN JOSE -- A turnaround in chip sales has begun and will likely continue this year and next, boosting demand for new semiconductor equipment as well.

That's the prognosis from SEMI, which forecast semi equipment sales and capital spending

SEMI pointed to two leading indicators -- the SIA's three-month moving average of chip sales, which was up for the third straight month in May, rising 5.8%, and SEMI's own three-month moving average of equipment sales, which rose for the first time in 14 months (up 1.4%).

"We expect the growth in equipment spending to continue well into next year. Capital spending, the industry's broadest measure of spending will grow by 31% next year," wrote George Burns of Strategic Marketing Associates in SEMI's newsletter, published yesterday.

The trade group predicts capital spending will jump 33% next year.