Optimism in chip market

Allied Materials, the largest provider of chipmaking equipment, expects sales to improve later this year

Chip-making equipment provider Applied Materials said on Tuesday the semiconductor market appears to be picking up, indicating that the chip glut could be over.

Mike Splinter, the chief executive of Applied Materials, said during an analysts' conference call on Tuesday that the market for its equipment is looking positive, according to Bloomberg.

"The outlook is improving," Splinter reportedly said. "Our customers remain confident about health of the market."

This prediction corresponds with the results of a recent study from technology research firm iSuppli, which found that excess semiconductor inventories fell 38 percent in the fourth quarter of 2004.

Chip over-production has contributed to past downturns in the industry, which tends to be marked by boom-and-bust cycles lasting a few years. Chip sales grew an estimated 29 percent in 2004 to $214bn, but are not expected to grow in 2005.