World demand for chips is set to edge higher this year after 2001's dire slump, according to industry experts.

Demand will grow by 2.3% in 2002, according to World Semiconductor Trade Statistics (WSTS).

But that is still only a very gentle rebound from last year's 32% drop, the worst-ever decline in the industry's history.

The news will cheer the wider technology sector, as chips tend to be first into the recession but also the first to lead the way out.

And predicted figures for 2003 and 2004 show much more sturdy growth of 21.7% and 14.5%.

Emergency action

The chip industry was battered by last year's slowing of demand for personal computers and mobile phones.

The industry's woes were then compounded by high inventories built up during the boom years.

The tough times drove many semiconductor firms to extreme measures to cut costs and remain afloat.

But despite some positive signs from the chip market, many analysts are waiting for companies to begin corporate spending on technology again before accepting that the bad times are over.

Memory hopes

And, following the results from the first three months of the year, it became clear that many firms are waiting to be convinced by a recovery in world economic growth before making new investments.

The WSTS also predicted burgeoning growth for memory chips, the so-called Drams, a key product used in computers.

Drams will bounce back by 44.3% this year, following 2001's 61.3% collapse, according to the report.

The WSTS figures cover 67 major chipmakers around the world.