Valley's tech firms report return of demand

In a positive sign for the high-tech industry, Silicon Valley's three largest chipmakers, Intel, AMD and National Semiconductor, said they had increased their sales forecast for the fourth quarter as sales of personal computes and other electronic gear appears to be improving. Sun Microsystems also reported new signs of returning demand.

Intel said fourth-quarter sales will be close to the $ 6.8 billion level, which had been at the high end of the earlier forecast range of $ 6.2 to $ 6.8 billion. AMD said it expects sales to rise 10 percent from the $ 765 million in the third quarter's $ 765.9 million.

"Revenue may slightly exceed our previous expectations. Business appears to have returned to seasonal patterns,' said Andy Bryant, CFO, Intel. Profitability at Intel may also increase as the company has been working hard to phase out the PIII class processor and move the market to the P4 level. Intel gets about $ 210 per P4 chip on average, compared with an estimated $ 140 for

PIIIs.

And in Santa Clara, National Semiconductor reported a narrower second-quarter loss than had been forecast as sales outpaced expectations. Brian Halla, CEO, National said orders being booked and shipped are stronger at this point in the current third quarter than they were at the corresponding period in the prior quarter and that he expected the trend to continue.

"From what we have so far, I'd say we feel pretty good," Halla said. The turn-around comes after National reported a $ 46 million second quarter loss just last week. Sales in the quarter fell 38 percent to $ 366.5 million. Finally, in Palo Alto, Sun Microsystems executives said they are seeing a significant upturn in new orders and the company will be able to report a sales increase for the current quarter. "We see good activity, and good interest in what we're doing," said Ed Zander, COO, Sun.

"We are making lots of sales calls. Despite the downturn, our strategy is right on. There's no midcourse correction to what we are doing."

Sun's new UltraSprac-III processors are driving about half the company's system sales, Zander said. New computers using the chips, including its E-15000 server, are selling well vs. IBM mainframes, he added, but he would not provide specific sales figures.

Sun continues to face competition from bankrupt companies selling its used Sun equipment, a problem stemming from fallen dot-com companies that's plagued Sun for more than a year. "Every time you think the latest bankruptcy has happened, there's another one. Every time that happens, there is potentially more equipment on the market. We have to deal with it," Zander said.