SAN JOSE – January sales of semiconductors rose 7% year-over-year to $19.7 billion globally, the Semiconductor Industry Association reported today. January sales were off 1.5% from December, bettering the historical seasonal drop of 2.2%.

“The new year got off to a good start for the global semiconductor industry with strong year-on-year growth in a historically weak month,” said SIA president George Scalise. “Retail sales, including consumer electronics products, were relatively strong in January and helped dampen the expected seasonal decline in sales.

"There are no excess inventories, end market demand remains strong and capacity utilization rates are very high," he said. SIA noted signs of recovery in networking equipment, and positive reports from manufacturers of PCs and cellphones.

Overall capacity utilization rose two points to 92% in the fourth quarter. Utilization of leading-edge capacity (defined as facilities capable of producing 0.12-micron and finer geometries) increased two points to 99%.

“Industry capital spending was essentially flat in 2005, and recent forecasts indicate that capital expenditures will grow between 4 and 6% in 2006,” said Scalise. “With capacity expansion in line with expected growth in demand for semiconductors, we do not foresee any excess capacity issues in 2006.

SIA maintainted its guidance of a sequential change of +/-1% for the current quarter.