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Chips look chipper

Kulicke & Soffa sees strong 1Q; chip sales spike

Chip equipment maker Kulicke & Soffa said Tuesday that it expects to "substantially exceed" First Call consensus estimates for its first quarter. Semiconductor companies are benefiting from a spike in November sales, according to an industry group.

Wall Street was expecting earnings of 36 cents a share for the quarter.

Kulicke & Soffa said revenue would be about $175m (£105m) and that it would beat estimates by "more than 30 percent."

The company also saw strong bookings, which will approach $200m. In a statement, Clifford G. Sprague, CFO, said the results were fueled by "strong demand for our Model 8028 wire bonder and the improvement in overall industry activity."

Chip equipment makers (index) are rebounding because chip makers are seeing strong demand and investing in new manufacturing gear. Novellus Systems recently said its quarter would handily top consensus and Applied Materials delivered an upside surprise.

In related news, the Semiconductor Industry Association (SIA), an industry trade group, reported worldwide sales of semiconductors rose to a record $14.2bn in November. The November tally topped October's record of $13.4bn.

"Today's global sales numbers represent phenomenal growth for the semiconductor industry that has not occurred since the explosive growth of 1995," SIA President George Scalise said in a statement "This is indeed an extraordinary time for the industry, in fact, the SIA forecast calls for continued robust growth in the new millennium.''

Demand is being fueled by wireless, broadband and other communications chips as well as healthy PC sales, which should benefit companies such as Intel and Advanced Micro Devices.

The wealth in the chip sector (index) is being spread around. "November's sales strongly illustrate the continuation of the industry growth pattern that began in mid-1998 and these numbers show a healthy chip industry with across the board sector growth," said Scalise.

The SIA also said memory demand was strong with flash memory increasing 74.2 percent year-to-date in 1999, primarily driven by wireless communications. "DRAM has increased 47.6 percent year-to-date in 1999 with PC and server demand being the major drivers," said Scalise.

The memory news won't come as any surprise given Micron Technology's recent upside surprise.

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