SAN JOSE - February chip sales were $18.1 billion worldwide, 2% below revised January sales but up 15.8% year-on-year, the Semiconductor Industry Association reported today. Inventory overages have been worked out of the supply chain, the trade group said.

"Worldwide sales of semiconductors have been stronger than expected during first two months of 2005," said SIA president George Scalise. "Flat sales in January followed by a modest sequential decline in February are actually encouraging signs given that these two months are normally slow periods for the industry."

Consumer spending patterns have become increasingly important to the worldwide semiconductor industry, Scalise noted. The SIA estimates that half of all semiconductor consumption in 2004 was driven by consumer purchases.
 
The industry "is paying closer attention to indicators of consumer confidence. At this time, those indicators appear to be positive," Scalise said.

Sales of personal computers and wireless handsets have increased from the same period of 2004 SIA, said. Microprocessor sales are up 11% from February 2004, DRAMs up 36% and ASICs for wireless applications up 53%.

Scalise said excess inventories are no longer a factor in industry sales. "According to iSuppli, excess inventories have continued to decline from $1.6 billion at the end of the third quarter of 2004 and will be at $700,000 million at the end of the first quarter of 2005.

"The overall health of the global semiconductor industry remains strong. If the current trends continue, our forecast for flat industry sales for 2005 could prove to have been overly cautious," Scalise said.