Chip Sales Up 6.5% First Half Of 2005; But Pace Slowed Q2, Says SIA; Trade group hints sales will pick up, but keeps full-year growth forecast at just 6%.(INTERNET & TECHNOLOGY)

Byline: JAMES DETAR

Despite signs that it might be a much better than expected year for chip sales, the industry's main trade group on Monday declined to boost its already once-raised outlook.

The Semiconductor Industry Association in June revised its 2005 chip sales forecast, saying it expects sales to rise 6% from 2004 to $226 billion. At the start of the year, it forecast flat sales.

Since then, market researchers have said sales of PCs and cell phones -- both of which are major chip users -- are surging more than expected. Some analysts say 6% is too low.

At its quarterly update Monday, the SIA said first-half sales rose 6.5% from the year-earlier period to $109 billion.

And SIA President George Scalise strongly hinted the pace will pick up in the second half of the year.

"Last year, inventory growth took place" in the first half of the year, he said Monday in a conference call. Growing inventory suggests slowing sales.