Mobile Products Drive Intel, Chip Industry
By Carlo Longino, Sat Jun 05 00:45:00 GMT 2004

The semiconductor business is reaping the benefits of the popularity of mobile products, a trend that doesn't look like it will be slowing anytime soon.

Intel said today that its flash-memory unit, which has seen declining sales for more than a year, is giving the company's second-quarter revenues a boost, as sales of Intel's bread and butter, chips for PCs, slow. Flash memory finds its way into consumer electronics products, particularly mobile phones. While Intel's CEO said earlier its mobile unit won't turn a profit this year, the company has made turning the unit around a priority.

The wireless market is helping the rest of the chip business, too, as the Semiconductor Industry Association said earlier this week that sales for April were a third higher than in 2003, putting the growth down to strong sales of digital signal processors, the specialized chips that let give mobile phones much of their power. DSP sales in general were up 6.8 percent, with wireless-specific ones up almost 9 percent. Cameraphones, too, helped raise sales of image-sensing devices 7.6 percent. Another semiconductor trade group says chip sales should increase by about 28 percent for the full year as well, thanks to heightened demand for phones as well as computers and DVD players.

And the good news keeps on coming: Morris Chang, the head of Taiwan Semiconductor Manufacturing Company, told attendees of the Computex trade show in Taipei this week that demand for 3G wireless technologies and convergent consumer electronics would allow the industry to grow at 10-12 percent over the next decade, as long as manufacturers could deal with shorter product lifecycles and reduced times to market.

In the short term, investors and analysts will be watching an update by Texas Instruments on Monday and results from National Semiconductor on Thursday to see just how real and widespread the upturn is.