LONDON — Monthly chip sales are expected to improve to a three-month average of $20.3 billion in October, up from $19.5 billion in September, according to Handelsbanken Capital Markets.

Actual chip sales for the month are expected to be $18.83 billion, up 9.0 percent year- on-year, better than the 8.1 percent gain recorded in September.

With end-user demand for PCs and consumer electronics apparently strong the industry has seemingly temporarily found a sweet spot among the thin margins. Such phases of boom usually end over production and excess going to inventory.

Official figures from the World Semiconductor Trade Statisitics are expected to be published by various regional semiconductor associations later this week. The SIA's Global Sales Report is tabulated by the World Semiconductor Trade Statistics organization as a moving three-month average to reduce the swings due to reporting effects from different companies.

According to Bruce Diesen, strategist with Handelsbanken, the improvements are being driven by increased PC sales, particularly of notebook PCs, and signified by China's PC production up 74 percent year-on-year in October. Mobile phone handsets, Apple’s iPod music player, Microsoft’s Xbox 360 and flat screen TV's are other areas boosting chip sales, Diesen said.

“We had expected a slight deceleration in chip sales due to high oil prices, but that hasn't occurred, so we are raising our 2005 chip forecast from 6 percent growth to 7 percent growth. We see 8 percent growth in 2006,” Diesen added.