Chipmakers such as Intel, Motorola, Advanced Micro Devices and Texas Instruments of the United States, Europe’s Philips and South Korea’s Samsung have all reported better-than-expected results for the just-ended third quarter.
Analysts on Wednesday said the results were a positive sign for companies that had been retrenching for the past three years.
Dutch-based Philips said recently it expected its semiconductors division to turn a profit in the fourth quarter.
Texas Instruments saw a 30% jump in chips for wireless products such as “smart phones” and personal digital assistants.
Intel said its third-quarter profit soared 142% in a year to $1.7 billion and sales surged 20%, helped by strong sales of notebook computer chips.
“Cost-cutting will remain important, but it will no longer be your CEO’s number one priority”
Sales of the new Intel Centrino chip have soared as consumers are drawn to new laptop computers that can connect to the Internet through “Wi-Fi” wireless networks.
In another positive sign, Intel – which holds about 80% of the computer chip market – predicted sales would increase in the fourth quarter to between $8.1 billion and $8.7 billion, which is above what analysts expected.
“Clearly semiconductor industry business conditions are pretty strong. This strength dates back to August or September,” said Dan Scovel, an analyst with the investment firm Needham.
The Semiconductor Industry Association (SIA) predicts sales will increase 16.8% in 2004 after an estimated 10.1% increase in 2003.
The positive signs for the chip sector are part of growing evidence of an overall rebound in the tech sector.
Michael Fleisher, chairman and chief executive officer of the market research firm Gartner, says he sees a sharp recovery in information technology capital spending in 2004, as companies replace aging equipment and look for new technology to become more efficient.
“A big turn is coming,” Fleisher told a technology gathering.
“We believe 2006 will look just as different when compared with 2003 as 2003 looks when compared with 1999. Companies are beginning to make the turn from protecting profitability to driving growth,” he said.
“Cost-cutting will remain important, but it will no longer be your CEO’s number one priority,” Fleisher added.