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Growth Is In The Chips

After two dismal years, chipmakers finally have some reasons for optimism.

Why are things looking up? Start with pent-up enterprise demand. According to one estimate, more than 180 million corporate PCs are at least four years old. Corporate spending certainly helped Intel, which showed strong fourth-quarter revenue growth after a relatively flat year. And although AMD turned in a disappointing fourth quarter, it could at least claim double-digit revenue growth.

AMD is also on track to compete in the enterprise server market this year with its 64-bit Opteron chip; it has also signed joint agreement with IBM to develop new nanoscale chip fabrication techniques. Intel is responding with an updated version of its Itanium 2 processor, and it has moved up plans to introduce the world's first dual-core processor, code-named Montecito, to 2005.

Chipmakers also are benefiting from the wireless boom. Intel has invested hundreds of millions of dollars in wireless startups to extend its lead developing mobile chips and related technologies, and its Centrino wireless chip line is due within the next few months.

What's farther ahead? Ever-smaller chip designs, including a transistor prototype from IBM that's 10 times smaller than anything on the market today. Given renewed demand for smaller, faster, and more efficient chips, manufacturers aren't likely to quit pushing Moore's Law as hard as they can.

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