Report: Demand for Chips Strong

S A N   J O S E, Calif., Oct. 9 -- Worldwide semiconductor sales will showdouble-digit growth in the next three years as manufacturers findplaces for them in a variety of devices other than the personalcomputer, a new report finds.

Sales of semiconductors are growing at a rate of at least 25percent as electronics manufacturers put them in cellular phones,gaming consoles, cameras, set-top boxes, handheld electronicorganizers and other devices, the Gartner Group research unit, Dataquest,announced in a report released today.

Total worldwide revenues in 2000 alone are expected to jump 37percent over 1999, to $231.6 billion, before moderating somewhat in2001-02 and moving into a slight downturn in 2003, according to theDataquest forecast.

The report, and several others, cast doubt on reports ofsluggish computer sales in Europe.

Tumbling Stocks

Intel Corp. and Dell Computer Corp. have seen their stock tumbleafter warning upcoming quarterly earnings will show revenue belowWall Street expectations because of weak European sales.

But a report by European research firm GFK Group provides arationale for those weak sales. It predicted Intel rival AdvancedMicro Devices Inc. in its upcoming earnings announcement wouldreveal its European market share jumped to 12 percent in theJuly-August period from 8 percent the same period a year earlierafter an aggressive push to bolster sales in personal computers andnotebooks.

Dell uses Intel as its preferred provider of computer chips,meaning any loss of Intel market share would affect it more thanmost other computer manufacturers.

A separate report from research firm International Data Grouppredicted European semiconductor sales will grow by 13 percent thisyear.

An Intel spokesman said the company cannot comment on thereports since it has entered a mandatory quiet period ahead ofearnings.

Huge Demand for Chips

Intel, AMD and other chipmakers have been scramblingto boost manufacturing in the face of continuing shortages ofhigh-end processors and memory chips. Cellular phone makers, such asNokia and Ericsson, and makers of electronic handhelds, such as Palmand Sony, are moving to make “smart” devices capable of accessingthe Internet, but the equipment requires greater processing powerwith low heat consumption.