Chip sales are running better than expected this year, prompting the Semiconductor Industry Association to up its 2005 forecast.

The trade group now expects sales to grow 6 per cent this year to $226bn. Back in November it had forecast 2005 sales would be flat on 2004’s $213bn.

Growth should continue for the next few years, with the market hitting $246bn in 2006, $273bn in 2007 and $309bn in 2008. This represents 9.8 per cent compound growth.

First quarter sales had been better than expected, it said, with wireless and PCs among end markets that had been stronger than forecast. Energy prices are now less of a concern, excess inventory has been worked off, and economic growth has remained strong, the group said.

The SIA is also making a big bet on consumer electronics, citing figures from the Consumer Electronics Association which said household CE spending grew 11 per cent last year, and should do the same this year.®

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