Global sales of equipment for manufacturing the semiconductor chip - used to power PCs, mobile phones and other electronic devices - slumped in October, according to industry statistics.

Sales dived 13% compared to September levels, said Semiconductor Equipment and Materials International (SEMI).

September's figures appeared to offer some hope of a recovery in the industry, which has suffered heavy job losses as manufacturers reined in spending.

Sales in September were the highest for 18 months.

Hard times

The industry has been hit by global economic slowdown, weaker than expected demand for new mobile phones and, last year, the first ever decline in shipments in the 20 year history of PCs.

However, semiconductor makers appear have overcome the worst of the slowdown

Semiconductor equipment sales for October - worth $2.03bn (£1.27bn) - remained 34.1% above October 2001.

However, figures for future orders have suggested the market remained weak and uncertain.

Beacon

The health of the semiconductor industry is widely seen as providing an early alert for the wider economy.

Hopes for recovery in the industry got a fillip earlier this month when two of the US' biggest chip makers, Intel and AMD, both raised their forecasts for fourth quarter revenues.

Intel said it was experiencing stronger demand for its microprocessors, especially in Asia.

However, analysts cautioned then that sales are usually stronger in the final three months of the year as Christmas shoppers pick out consumer electronics gifts.

They warned that a better outlook for Christmas did not amount to proof of an upturn for the chip industry.

SEMI said October sales fell 27.9% in North America to $578.3m, while Japan's semiconductor sales were down 28.2% to $371.9m.

Only European semiconductor sales rose, up 18.8% to $275m.