The Semiconductor Industry Association (SIA) says global revenue for chip makers in the second quarter totaled $82.7 billion, up 10.8% over the year-earlier period. Sales for the first six months rose 11.1% over the first half of last year and if this trend continues, this would mark an all-time sales record in 2014.

Revenue had reached $305.6 billion for all of 2013, a 5% increase that marked the last annual peak for chip makers.

A nonprofit group called World Semiconductor Trade Statistics (WSTS), which supplies the data used by the SIA, in April had upgraded its projection for 2014 revenue growth to 6.5% from a prior estimate of 4.1%.

Brian Toohey, SIA’s president and chief executive, points to several positive factors that are helping manufacturers of most kinds of chips:

  • Prices have remained high lately on memory chips. That sector has recently benefited from strong demand and consolidation among manufacturers that has reduced chip supplies.
  • Sales of personal computers—long a major consumer of many chips—have strengthened after a long slide as consumer dollars shifted to tablets. Demand also has remained strong for smartphones, which use a wide variety of chips.
  • Demand has been growing for chips in cars, medical devices and the “Internet of Things,” adding sensors, computing and communications capability to many kinds of everyday devices, including light bulbs, door locks and thermostats.

Revenue are projected by WSTS to grow again in 2015 and 2016, Mr. Toohey said.

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Wayne Thorp
ABOUT THE AUTHOR:

Wayne A. Thorp, CFA, is editor of Computerized Investing and a vice president and the senior financial analyst at The American Association of Individual Investors (AAII). He is also the program manager for AAII's Stock Investor Pro fundamental stock screening and research database program and is on the advisory boards of AAII's Stock Superstars Report and Dividend Investing newsletters. He holds the Chartered Financial Analyst (CFA) designation and is a 1997 honors graduate of DePaul University in Chicago. Wayne's interests include stock screening, technical analysis and charting, social media and tech gadgets. However, in the summer he'd prefer to be hip-deep in northern Michigan's Manistee River fly-fishing for rainbow trout.

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