Semiconductor Shares Zoom as Sales Momentum Builds

A big reason for Nasdaq 3,000: Stocks of many computer chip makers and their equipment suppliers have been rocketing anew lately on expectations that chip sales growth will continue to boom.

The Semiconductor Industry Assn. reported Wednesday that worldwide chip sales surged to $12.7 billion in September, up 24% from a year ago and up 6.4% from August.

The news sent the Philadelphia semiconductor index of 16 chip-making and equipment stocks up 4.6% to a record high of 597.72. It is up 71% so far this year.

Chip-equipment stocks rising sharply Wednesday included Applied Materials, up $3.31 to $94.44; Novellus Systems, up $4.31 to $87.13; and KLA-Tencor, the leading maker of semiconductor inspection tools, up $2.56 to $85.69.

Among chip makers, Texas Instruments leaped $2.75 to $91.63, Intel gained $2.31 to $79.75 and Rambus soared $18 to $84.50.

“Investors are gaining confidence in the duration and magnitude of the cycle for the industry,” said David Powers, an analyst with Edward D. Jones & Co.

Chip sales this year are expected to rise 15% to $144 billion, the SIA said, after falling 8% last year. In 2000 sales are projected to rise 21%.

The semiconductor industry is surging as the cellular-phone market booms and robust Internet growth sparks sales of chip-intensive networking equipment.

“This month’s global sales numbers are the largest we have seen all year, continuing the growth pattern that commenced in mid-1998,” said the SIA’s president, George Scalise.

Bullish analyst reports also helped fuel Wednesday’s rally. ASM International shrieked up $4.13 to $12.50 after the maker of chip-making materials was raised to “buy” from “hold” by ING Barings.

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Bloomberg News was used in compiling this report.