The chips are up. Semiconductor chips, that is.
The sector rallied today on word from the Semiconductor Industry Association (SIA) that August chip sales rose 12.5% year-over-year, to $13.4 billion, while ticking up a healthy 4% from July levels. The dog days of summer got a boost from back-to-school spending, but SIA also reported "early signs of a business upgrade cycle."
On the heels of six consecutive monthly increases in sales, this was the strongest August on record for chips since 1990, with the sole exception of the abnormal peak hit in 2000. Last month, microprocessor sales rose 7.8% from July, sending Intel (NASDAQ:INTC) and Advanced Micro Devices (NYSE:AMD) higher, while DRAM sales gained 11% over the previous month, edging Infineon (NYSE:IFX) upward.
Strength was most abundant in Asia Pacific, where monthly sales rose 6.4%. Europe was second, seeing a 3.8% gain, followed by the America's 2.5% increase, which was trailed only by Japan at 1.6%.
A sign of consumer spending on a small scale, the chip industry's consumer product sales, which includes DVD players and digital cameras, continued to strengthen, with Flash memory revenue up 6.9% last month, and the holidays still far around the corner.
Today's news also helped chip equipment manufacturers, including Applied Materials (NYSE:AMAT), KLA Tencor (NASDAQ:KLAC), and Lam Research (NASDAQ:LRCX), although a gain in chip sales doesn't necessarily mean increased equipment sales down the road.
