Chip sales chugged along for the first quarter and the month of March. The Semiconductor Industry Association reported that worldwide sales for the first quarter of 2013 were 0.9 percent higher from sales a year ago. Global sales for March 2013 were $23.48 billion, up 0.9 percent higher than $23.28 billion a year ago and up 1.1 percent from the previous month.

The news isn’t dramatic, but it shows that memory chip prices, which often swing widely, have stabilized. Chip sales are a bellwether for the whole $1 trillion electronics industry, as chips are used in almost everything electronic.

“Through the first quarter of 2013, the global semiconductor industry has seen modest but consistent growth compared to last year,” said Brian Toohey, the president and CEO of the SIA, the chip industry’s trade group. “Sales have increased across most end product categories, with memory showing the strongest growth. With recent indications that companies could be set to replenish inventories, we are hopeful that growth will continue in the months ahead. Regionally, the Americas slipped slightly in March after a strong start to the year, but Asia Pacific and Europe have seen impressive growth recently.”

Year-over-year sales increased 6.9 percent in Asia Pacific and 0.7 percent in Europe. But sales fell 1.5 percent in the Americas. Japan sales plummeted 18 percent, largely because of the devaluation of the Japanese yen. Sales in Europe increased by 5.7 percent compared to the previous month. Sales were up 1.7 percent in Asia Pacific from the previous month, but they fell 1.6 percent in Japan and down 1.9 percent in the Americas. All monthly sales numbers represent a three-month moving average.

Fabless semiconductor company Arctic Sand has raised $9.6 million in its first round of funding. The technology was first developed at MIT and consolidates multiple power components onto one chip to maximize the power of electronic devices. Arctic Sand is commercializing the technology for mass markets, like telecom, datacom, industrial and mobile. Its Transformative Integrated Power Solutions platform converts power inside devices to significantly reduce energy loss.

Data centers suck up a lot of resources, both financial and ecological. In a statement issued by Arctic Sand, CEO and founder Nadia Shalaby said that data centers spend more than $50 billion annually on electricity and emit large amounts of carbon dioxide. By reducing the amount of power-conversion losses, these chips save energy, space, and money.

“A staggering 80% of energy generated worldwide is lost as heat due to power-conversion losses,” said Shalaby. “Such excessive power inefficiency results in both unnecessary electricity expenses and significantly oversized distribution and generation in serving the world’s rapidly expanding computing and data storage needs.”

Arctic Sand has won a trophy case of prestigious awards, including the 2011 NASA Game Changer Award, the US Department of Energy U-Launch Award and the NREL Industry Growth Forum Grand Prize Award, as well as the National Science Foundation’s Small Business Innovation Research Phase 1 grant. Institutional investors include Arsenal Venture Partners, Northwater Capital, and Ray Stata. Strategic investors include Dialog Semiconductor and Energy Technology Ventures, a joint venture involving energy corporations ConovoPhillips, GE, and NRG Energy.

The financing will go towards bringing the power-conversion chips to market. Arctic Sand is based in Cambridge, Mass. Read the press release.

The deal will trigger a $703 million charge for AMD, which separated from Globalfoundries three years ago to focus on designing and selling microprocessors. AMD will pay $425 million to Globalfoundries over two years and give up its 8.8 percent stake in the foundry. In return, AMD re-negotiated chip pricing with Globalfoundries and it will not have to make a $430 million payment during 2012.

AMD will also no longer give Globalfoundries exclusivity in manufacturing AMD’s 28-nanometer accelerated processing units (APUs). That will give AMD more flexibility in sourcing its chips.

Milpitas, Calif.-based Globalfoundries will still have AMD as primary customer, but Globalfoundries will now be wholly owned by the Advanced Technology Investment Company (ATIC), the investment arm of Abu Dhabi.

“Today marks the start of a new era for Globalfoundries as it becomes a truly independent foundry,” said Globalfoundries chief executive Ajit Manocha.  “Globalfoundries has a clear vision to be the leading semiconductor foundry partner to AMD and one of the world’s top technology companies. We continue to execute on our strategy to propel ATIC’s long-term investment philosophy into true value creation for our shareholder and customers.”

Globalfoundries showed an 80 percent increase in the number of 32-nanometer microprocessors shipped to AMD in the fourth quarter, compared to the third quarter. In January, Globalfoundries said it would spend more than $3 billion in 2012 to expand its chip factories in Singapore, Germany (pictured above), and New York. The company is building a new 300-millimeter-wafer manufacturing plant in New York as part of a plan to make chips for IBM.

Sunnyvale, Calif.-based AMD said that its gross profit margin guidance remains unchanged as a result of the deal.

Formulated in 1965 by Intel chairman emeritus Gordon Moore, Moore’s Law isn’t guaranteed. But today’s announcements show that the world’s biggest chip maker is still delivering on Moore’s prediction. The new advances include leaps in energy efficient computing, low-voltage processing, integrated digital radios, and efficient processor graphics. Intel is making the announcement through various talks at the International Solid State Circuits Conference, an engineering and science event that starts today in San Francisco.

“Energy efficiency has been Intel’s goal for many years now,” said Justin Rattner, chief technology officer at Intel, in a call with reporters. “We do it to minimize the energy impact on the environment but also to make Intel’s products more scalable across the computing continuum.”

That means Intel is creating energy efficient chips for low-power mobile devices all the way up to high-performance supercomputing chips. In contrast to past years where performance alone mattered, Intel’s chips are now designed to work within limited energy budgets. Various techniques now enable five-time to 10-time improvements in energy efficiency, or higher performance per watt of power consumption.

Intel’s latest advances include the ability to operate at “near threshhold voltage,” which balances fast operation and low power use and enables a five- to 10-time improvement in energy efficiency. Chips today have to be able to operate at a greater dynamic range, starting at a few megahertz and skyrocketing to a gigahertz or more for an urgent task, then returning to the megahertz level again. Intel’s experimental 32-nanometer chip, based on the original Pentium processor chip design from 1993, can operate at 3 megahertz at 280 millivolts and then shoot up to 915 megahertz at 1.2 volts.

Intel has also managed to reduce the amount of voltage required to run a memory chip as well as a processor-graphics combination chip.

In digital radios, Intel has integrated a WiFi radio into a system-on-a-chip package that includes two Atom processor cores. The 32-nanometer chip could drive down the cost and size of future mobile devices.

“That’s enabling Moore’s Law for RF (radio frequency) circuits,” which typically don’t scale well as you shrink the circuits from one generation to the next, Rattner said. “We are getting close to having the complete kit of digital radio building blocks.”

Normally, radio circuits create interference with other circuits, but Intel has successfully integrated the radio portion of a chip just millimeters away from other processor elements. The barriers to doing a commercial version of this kind of chip are falling rapidly, Rattner said.

“We’ve moved to rethink radio from a computational perspective,” Rattner said.

Over time, Rattner said Intel also hopes to build a cellular phone radio that can be embedded in an Intel processor chip.

Intel has also improved math with so-called floating point processing without compromising energy efficiency. This 32-nanometer experimental chip varies the precision of its floating point calculations in a dynamic manner. The chip uses 50 percent less power and is seven times more energy efficient than regular chips.

On a near-term basis, Intel is also talking about Ivy Bridge, the code name for a new processor that will be the first to use Intel’s new 3D Tri-Gate 22-nanometer transistor technology.

Applied said its non-GAAP net income was $240 million, or 18 cents a share. Analysts were expecting net income of 12 cents a share. Sales were $2.19 billion, compared to analyst estimates of $1.97 billion. After hours, Applied stock is up 5.75 percent to $13.97 a share.

Santa Clara, Calif.-based Applied Materials chief executive Mike Splinter said that Applied’s results were driven by strong capital investments by chip makers, who in turn are being bouyed by global demand for mobile devices.

He said the company sees solid order momentum and an improved outlook for the company’s fiscal second quarter that ends at the end of April. For the second quarter, Applied expects sales to be up 5 to 15 percent from the first quarter. Non-GAAP net income will likely be 20 cents to 28 cents per share.

On a GAAP basis, the company reported sales of $2.19 billion, down from $2.69 billion a year ago. Net income was $117 million, or 9 cents a share, on a GAAP basis, compared to $506 million, or 38 cents a share a year ago.

Non-GAAP net income was $240 million, or 18 cents a share, compared with $484 million, or 36 cents a share a year ago. During the quarter, Applied acquired Varian Associates, which generated $270 million in orders and sales of $200 million. It contributed 1 cent a share to non-GAAP earnings per share. Applied’s business of making equipment to build liquid crystal displays was weak at $104 million, down 39 percent from a year ago. Solar manufacturing equipment orders were $33 million, down 62 percent, thanks to over-capacity in the industry.

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

SuVolta is coming out of stealth today to announce that it has created a chip technology that will reduce the amount of power consumed by semiconductor chips by more than 50 percent without sacrificing performance.

Reducing power consumption is the biggest challenge in electronics today, since it means mobile devices can last longer on a battery charge. The Los Gatos, Calif.-based company says its PowerShrink technology addresses a fundamental problem in the physics behind transistors, the basic building blocks of all electronic chips. If it works, the technology could help improve battery life in portable products — smartphones, tablets, and notebooks — and offer an alternative to a revolutionary Intel technology known as Tri-Gate.

The alternative is an important one because other chip makers want to keep up with Intel. To do so, they would ordinarily have to invest billions of dollars in chip manufacturing technology and build a new factory. This kind of company is pretty rare, as we can’t remember when we wrote about a financing for a company with fundamental technology behind it.

Intel announced Tri-Gate a few weeks ago and said it will use 3D structures to pack more transistors into a given space and allow it to cut power consumption by 50 percent and improve performance by 37 percent. SuVolta attacks a problem called transistor variation. It minimizes the electrical variation in each of the millions of transistors on a chip. On the manufacturing level, SuVolta merely tweaks the “recipe” for making a chip. The result is that it reduces the variation in voltage for a chip, allowing for efficiency improvements.

“The semiconductor industry is pursuing power efficiency as doggedly as some early explorers searched for the fountain of youth,” said Nathan Brookwood, an analyst at Insight 64. “But today’s goal — longer battery life — isn’t an unattainable fable. Any technology that promises to greatly improve the power efficiency of microprocessors without sacrificing performance is worth a close look.”

SuVolta’s team of scientists and engineers is led by Scott Thompson (right), an internationally recognized expert on transistor technology and a former Intel fellow. The team redefined the ordinary transistor, lowering the power consumption without requiring the chips to be built with new, untested fabrication equipment. That fact is key to ensuring that the PowerShrink transistors can be built at a low cost. The effect is like putting a new engine in a car that doubles its miles-per-gallon and easily fits in the same car chassis.

SuVolta licenses its technology to chip makers and already has a major customer with Fujitsu Semiconductor. The PowerShrink platform will be in production in 2012. Bruce McWilliams (left), chief executive of SuVolta and former CEO of tech licensing firm Tessera, said that the PowerShrink technology will scale to smaller feature sizes as manufacturing technology advances.

SuVolta’s got some premium investors backing it, including Kleiner Perkins Caufield & Byers, August Capital and New Enterprise Associates. The company raised $22 million in funding in May 2010. Bill Joy, a partner at Kleiner Perkins, said that SuVolta’s platform will enable power reductions in existing chips and in those where the designs are still in the works.

Handel Jones, president at market analyst firm International Business Strategies, said that SuVolta has broken a power impasse with technology that has been demonstrated. It is proven at 65-nanometer manufacturing and could be used at 28-nanometers and beyond.

SuVolta could turn out to be a strategic company in a lot of ways. Intel is losing out to the ARM microprocessor architecture in terms of the numbers of units sold each year. The primary reason is that ARM’s licensees build the lowest-power microprocessors that can be used in smartphones and tablets. Intel is chasing ARM, but the power problem has been holding Intel back. With Tri-Gate, Intel can make some gains. But SuVolta can pretty much arm all of the chip makers with low-power technology.

SuVolta was founded in 2006 under the name DSM Solutions and has 45 employees. To date, the company has raised $58.6 million. SuVolta originally pursued a technology called JFETs to reduce power in digital products. But the company concluded that wouldn’t work because it required customers to invest in new infrastructure. The company brought in McWilliams and then Thompson, who then crafted a product strategy that was more realistic. That led to the May 2010 funding.

ARM, Broadcom, Cypress Semiconductor, and Fujitsu have all expressed support for the company.

The Intel connection is important because Intel spends billions of dollars on its chip manufacturing and rarely shares the competitive advantage it gains from those factories with other companies. It isn’t clear why Intel has decided to make chips for Tabula, but it will give the small company an advantage as it competes with large rivals such as Xilinx and Altera. Tabula and Intel have not announced the manufacturing deal, but a source independently confirmed the relationship to VentureBeat.

Tabula has been around for eight years trying to perfect a way to get a lot of processing done without requiring a huge chip to do it. The company has focused its technology on field programmable gate arrays, or FPGAs, a $5 billion market for chips that can be programmed to do something unique at the very last minute before being built into a device such as computer networking gear or communications equipment.

“We can see that this will be transformative, but it’s taking a lot of time and patience to get there,” said Greg Papadopoulos, a partner at one of Tabula’s investors, New Enterprise Associates, and former chief technology officer at Sun Microsystems, in a recent interview.

To date, Tabula has raised more than $214 million from backers such as NEA as well as Benchmark Capital, Crosslink Capital, Balderton Capital, Greylock Partners, Integral Capital Partners, and DAG Ventures. Investors have stayed away from chip companies lately because they take so much funding in order to bring a new chip to the market and because huge chip makers have covered a lot of the product landscape. But Papadopoulos said the deal showed there is still funding for those who can make dramatic gains in new technology.

Lots of rivals such as Tier Logic have tried to crack the grip of Xilinx and Altera, but have largely failed over the years. Tabula has figured out how to use time sharing to make a better FPGA. It does so by programming an FPGA to do a certain function. Once that function is performed, Tabula then reprograms the FPGA to do something else on the fly.

Normally, someone programs an FPGA and never reprograms it again. But reconfiguring quickly to do other tasks, you don’t have to have use hard-coded silicon to do those other tasks.

A chip can therefore be built to do a bunch of tasks, without all of the usual accompany silicon, said Tom Halfhill, an analyst at the Linley Group. “It’s a clever idea,” Halfhill said. “They say that the faster the chip runs, the more time slices they can squeeze in. It’s like having more space, like in a three-dimensional building where you use an elevator to get more space. But in this chip, the third dimension is a temporal one, not a spatial dimension.”

Halfhill says the success of the idea depends on how quickly Tabula can move from one manufacturing technology to another.

That may be where Intel comes in, as Intel has promised that it will accelerate its shift from one generation of manufacturing to another. Semi-Accurate reports that Intel may be interested in the deal with Tabula so that it can easily make chips that are used in conjunction with its existing Atom microprocessors and other future microprocessors. Tabula believes it can make FPGA chips that cost $100 to $200, around a fifth of the usual cost for similarly capable chips.

The tough task is that Tabula will have to keep up with Altera and Xilinx — which dominate the multibillion dollar FPGA market — in manufacturing. Those companies can invest their huge profits into manufacturing alliances that get them the latest technology as quickly as possible. Tabula would ordinarily have to wait in line to get access to the same manufacturing. Right now, Tabula’s chips are made with 40-nanometer manufacturing technology. (A nanometer is a billionth of a meter). Tabula began making those chips last year.

But Intel is already manufacturing at the more advanced 32-nanometer node and will likely move to 28 nanometers before the rest of the industry does. Halfhill said Tabula needs to move as quickly as it can to 32-nanometer and 28-nanometer production in order to succeed.

Tabula was founded in 2003 by Steve Teig, former chief technology officer at Cadence Design Systems. Dennis Segers is chief executive of Tabula. Segers has said that the latest round of funding will take the company to profitability. Last year, Tabula generated its first revenues.

These two companies aren’t household names for consumers with the exception of those who remember TI’s old calculators from the 1970s, as pictured. But their chips are the building blocks of billions of dollars worth of electronic gadgets, as they enable the translation of real-world signals such as voice into an electronic format that computers or phones can understand and manipulate.

The purchase price is a 78 percent premium over the $3.4 billion market capitalization of National Semiconductor, with TI agreeing to pay $25 a share. National Semiconductor shares were trading at $14.07 a share.

TI chief executive Rich Templeton described the deal as being about “strength and growth.” Templeton complimented National Semiconductor for boosting profits and cutting expenses. He said the acquisition could boost TI’s profits in the future. After the deal is complete, more than half of TI’s business will be in analog chips.

TI makes a wide variety of chips, from high-value processors used in mobile phones to small-value analog chips that convert real world signals, such as voice, from one format to another. National Semiconductor also makes a wide variety of analog chips, such as those that drive stereo speakers. Full told, TI has more than 30,000 analog chips in its catalog while National has 12,000.

Historically, Dallas-based TI and Santa Clara, Calif.-based National Semiconductor have been fierce rivals. TI was founded in 1947 to make transistors. It grew a huge defense business, a calculator business and other businesses. But it shed those to focus on digital signal processor chips and analog chips, eventually becoming a huge player in the cell phone chip business in the 1990s. National Semiconductor was started in 1959 and became one of the foundational companies of Silicon Valley. The chip industry grew up in parallel in both regions, with many companies spinning off each mother ship.

National Semiconductor also has its own chip factories in Maine, Scotland and Malaysia. TI expects to pay for the deal with a combination of cash and debt. It has $3 billion in cash and can borrow $1.9 billion in a revolving credit facility. National has $879 million in cash and $1 billion in debt. TI shares are up slightly in after-hours trading.

IBM and a research group in Singapore have engineered a new kind of synthetic, biodegradable nano particle that could be used to attack bacteria that have become resistant to antibiotics.

The researchers believe that the nanomedicine breakthrough could eventually be used to fight infectious diseases better than antibiotics. If it works, the nanomedicine could save countless lives and protect people from illnesses that arise from bacterial infections, like staph.

Using a trick from chip manufacturing, the researchers figured out how to isolate certain kinds of cells and attack them. That gets around the problem of many drugs today that kill off the good red blood cells at the same time that they eradicate bad cells. The researchers said the synthetic polymers they created can seek out bacteria cells and destroy their membrane walls.

“It’s like a hammer,” said James Hedrick, advanced organic materials scientist at IBM’s Almaden research center in San Jose, Calif. “We target the membrane directly. The overall goal is to have a huge societal impact, with improved ways for drug and gene delivery.”

Hedrick, who has worked at IBM for a couple of decades, said his team and another at the Institute of Bioengineering and Nanotechnology in Singapore brought in different approaches. IBM had done work on nanotechnology and semiconductor manufacturing while the Singapore institute worked the medicine.

They created new types of polymers that could detect and destroy bacteria and infectious diseases like Methicillin-resistant Staphylococcus aureus, known as MRSA, or staph. Hedrick said the polymers can be built with a great deal of control from organic molecules, which makes them biodegradable.

The nano particles are physically attracted to infected cells like a magnet, breaking their membrane walls without destroying healthy cells around them. These agents prevent the bacteria from developing drug resistance by breaking through the cell wall and membrane, a fundamentally different mode of attack compared to antibiotics.

MRSA is a type of dangerous bacteria that is commonly found on the skin and easily contracted in places like gyms, schools and hospitals where people are in close contact. In 2005, MRSA was responsible for nearly 95,000 serious infections, and associated with almost 19,000 hospital stay-related deaths in the United States.

Hedrick said that decades of learning about chip materials has helped the team, which has worked on the problem at least five years, to figure out how to craft nano structures that can be injected directly into the body or applied to the skin. The nanomedicine could, for instance, be put into anti-bacterial soap, deodorant, hand sanitizer or lotion. It could help heal wounds, tuberculosis, and lung infections.

Our immune systems are designed to protect us from harmful substances, both inside and out, but conventional antibiotics are often rejected by the body or have a limited success rate in treating drug-resistant bacteria. But the new materials can work because they change themselves once they come into contact with water in the body or on its surface. The material self-assembles into a new polymer structure that is electrostatically attracted to the bacteria membranes. The polymers then break through the cell membranes, destroying the cell. The bacteria can’t adapt to this kind of physical attack.

Fortunately, cells have a natural electric charge. The polymers are drawn only to infected areas. Other antimicrobial materials aren’t biodegradable, but these new materials are made of simple organic molecules. That means they can naturally exit the body, in contrast to other medicines that gather in the body and cause side effects.

The lead collaborator at the Singapore group was Yiyan Yang. The new polymers were tested against clinical microbial samples at a medical hospital at Zhejiang University in China. Clinical trials and plenty of other work have to be done before the nanomedicine will be commercially available.

“It’s still a work in progress and is in the early stages,” Hedrick said. “The results are extraordinarily promising at this stage.”

Tilera

The deal shows that funding for semiconductor companies, particularly those with strong customer traction, hasn’t completely dried up. Chip companies often require $80 million or more just to bring a product to market, so it also isn’t surprising to see Tilera raise such a large round.

Tilera has been shipping its many-core microprocessors since 2007. Customers are concentrated in the cloud computing and communications infrastructure, so Tilera effectively makes sure that the internet stays up and running despite heavy loads from serving videos and other heavy-duty apps. Tilera expects to reach profitability later this year, said Omid Tahernia, chief executive of Tilera, in an interview.

But it needs the money as it undergoes a big expansion, including accelerating development of its fourth-generation processor family. Investors in the new round include Artis Capital, West Summit, Cisco, and Samsung. Existing investors Walden International, Bessemer Venture Partners and Columbia Capital also participated. Other past investors include Broadcom, NTT Finance, VentureTech Alliance and Quanta Computer.

When we wrote about the introduction of the Tile-Gx processors in the past, we noted that the new chip will have many times the performance per watt consumed as Intel’s fastest Nehalem-class server microprocessors. Since it’s difficult for programmers to write software that can keep all the cores busy, the current Intel chips max out at eight cores, and many computer scientists say core efficiency maxes out at 32.

But Tilera has come up with a unique programming model with tools that make the process of creating software to run on Tilera’s chips much easier, such as an ANSI C/C++ compiler, GNU tools and the open source Eclipse integrated development environment. The result, the company claims, is unbeatable performance and performance-per-watt of power used, Tahernia said.

Tilera has 36 and 64-core processors in production, and Quanta is now shipping a TilePro-based server with 512 cores. The company has 150 customers. The first Tile-Gx 100-core processor will be available in engineering samples this quarter. Tilera was founded in 2004 and has 85 employees. To date, Tilera has raised $109 million.

Rivals include Cavium Networks, RMI, Netlogic, Freescale, Intel and others.

Chip industry sales are closely followed as a bellwether for the health of the tech economy, since chips are used in all things electronic. Sales for the third quarter ended Sept. 30 were $79.4 billion, up 6.1 percent from the second quarter and up 26.2 percent from the third quarter a year ago. All the numbers represent a three-month moving average, a mathematical smoothing technique.

Brian Toohey, president of the SIA, said that chip sales grew steadily in all regions of the world through the third quarter. Demand was strong in consumer and industrial electronic products, and inventory is generally in balance with demand. Toohey expects the growth rate will be more moderate through the end of the year as economic uncertainty impacts consumer purchases of electronic goods. The SIA will present an updated forecast on Nov. 4. Chip makers employ roughly 185,000 workers in the U.S.

The chip industry’s trade group said that year-to-date sales are $169.2 billion, up 46.7 percent from $115.3 billion in the first seven months of 2009. The numbers are closely watched because chips are used in everything electronic, from computers to smartphones and consumer electronics. They are a bellweather for the overall economy.

All monthly sales numbers represent a three-month moving average. In June, sales were up 47 percent from a year ago.

“Worldwide sales of semiconductors were strong in July despite growing indications of slower growth in the overall economy,” said SIA President Brian Toohey. “The continued proliferation of semiconductors into a broad range of products provides opportunities for industry expansion even in a period of slower overall economic growth.”

He added, “Although recent public statements from a number of major manufacturers have emphasized limited visibility for the near-term, we continue to expect that industry growth for 2010 will be in line with our mid-year forecast of 28.4 percent.”

Toohey’s comment is a reference to Intel’s revised downward forecast, which was lower than analysts and the company had expected due to the downturn in the economy.

In other words, the fast growth of the first half of the year will be tempered by slowing growth in the second half. The year ago numbers have been easy for the industry to beat because the world was locked in the financial crisis for much of last year. Since that time, the industry has benefited from a recovery in the tech industry.

Sales in May were $24.7 billion, up from $23.6 billion in April and $16.7 billion in May, 2009, according to the chip industry’s trade group. Chip sales are a bellwether for the technology industry since chips are used in everything electronic.

All monthly sales numbers represent a three-month moving average, a statistical smoothing technique. The semiconductor industry is on track to hit the SIA’s forecast of 28.4 percent growth to $290.5 billion in 2010, said George Scalise, president of the SIA.

Chip sales have been buoyed by sales of PCs, cell phones, corporate information technology, industrial applications and autos. Unit sales of personal computers, buoyed by the launch of Microsoft’s Windows 7 operating system last fall, are now expected to grow by 20 percent in 2010 and cell phone unit sales are expected to be up 10 percent to 12 percent. That’s remarkably strong, given the sputtering U.S. economy with its persistent high unemployment.

But Scalise said that emerging markets such as China and India are fueling sales of PC and communications products. The car market is recovering after several weak years, and corporate buyers are purchasing equipment again after delaying purchases at the onset of the recession.

In the second half of 2010, Scalise said year-on-year and sequential growth rates are likely to slow, as the overall market was very depressed in the first half of 2009 and so numbers for that period were easy to beat. The recovery started in the second half of 2009. Scalise said that concerns about government debt, declining consumer confidence, and pressures on government spending are worth watching as the chip industry is sensitive to macroeconomic conditions.

The chip industry trade group, the Semiconductor Industry Association, said that the first quarter of last year marked the low point in semiconductor sales during the global recession and that a recovery has been boosting sales ever since. For the first quarter of 2010, sales were $69.2 billion, compared to $43.7 billion a year earlier. (All monthly sales numbers represent a three-month moving average, a mathematical smoothing technique).

“Global sales of semiconductors set a new high for the month of March and were second only to the record sales reported in November 2007,” said SIA President George Scalise. “Healthy demand from major end markets coupled with restocking to normal inventory levels contributed to strong first-quarter growth. While we expect that 2010 sales will continue to be strong, the year-on-year growth rate will moderate going forward, reflecting the industry recovery that began in the second half of 2009.”

Scalise said that industry contract manufacturers as well as chip design companies that have their own chip factories are expanding production to bring supply in line with demand. The association is not worried about excess inventories or excess capacity that could initiate a downturn, due to strong demand. Computing and communications, which account for more than 60 percent of total chip demand, are showing healthy unit sales increases. PCs are expected to grow in the mid-to-high teens in unit sales, while cell phones are expected to grow in high single-digit percentages.

The sales have increased in a variety of market segments, including enterprise sales, where the recovery has been slower than in the consumer market. The Chinese market helped spur growth. Overall, the SIA expects double-digit percentage growth in revenues in 2010.