Strong sales of personal computers and consumer electronics are boosting the optimism of semiconductor makers.

The worlds largest contract manufacturer of microchips, Taiwan Semiconductor Manufacturing Company (TSMC), said it expected strong sales in 2002.

South Korean rivals have recently made similar bullish forecasts.

The new optimisim was fuelled by buoyant sales figures during the last three month of 2001, said Morris Chang, TSMC's chief executive.

However he warned that although the personal computers and electronics were recovering strongly, the communications sector would not pick up until the second half of the year.

TSMC's sales in December totalled 11.7 Taiwan dollars ($335.6m, �231.8m), its sixth month-on-month improvement.

Early recovery

The company was hit hard by the worst slump in the history of the chip industry in 2001.

But analysts said that TSMC had better chances for a quick recovery than close rivals like Taiwan's United Microelectronics Corporation and Singapore's Chartered Semiconductor Manufacturing, the second and the third largest independent chip foundries.

TSMC has the largest share in the foundry market and a wide customer base, while its closest competitors still rely largely on selling to the stagnant telecommunications industry.

The firm is now considering setting up a subsidiary in China and waiting for the Taiwan government to remove the ban on domestic companies investing on the mainland.