The world's chip factories operated at their fastest rate in almost four years in the April-June period, boosted by demand for chips for cell phones and digital appliances such as flat-panel televisions, an industry group said on Tuesday.

The utilisation rate was 95.4 percent in the period, posting quarter-on-quarter growth for the sixth straight quarter, the Semiconductor International Capacity Statistics, or SICAS, group said.

The rate was the highest since it hit 96.4 percent in the third quarter of 2000. After a boom that year, the semiconductor market went into a severe downturn in 2001 and 2002.

A SICAS official said utilisation rates are likely to remain relatively high for the rest of this year before heading lower next year.

"Obviously, there is a backlog of orders out there. But at the same time, some of the products made recently at these high usage rates go into inventory. We may start seeing inventory build-up," he said.

Global semiconductor sales are expected to post only modest growth next year and possibly contract in 2006 after growing nearly 30 percent this year.

NEC Electronics, the world's eighth-largest chipmaker, said late last month that its quarterly profit rose 43 percent on the year thanks to robust demand for microchips used in DVD recorders and other digital consumer products.

But it kept its full-year net profit forecast unchanged, citing a possible adjustment in production in the January-March quarter next year.

Capacity for all integrated circuits grew to 1,405,800 silicon wafer starts per week from 1,372,500 in the previous quarter. Actual wafer starts, which reflect demand for chips, amounted to 1,340,900 per week, compared with 1,281,600 in the January-March quarter.

A wafer start is the lengthy process during which chip circuits are etched onto silicon wafers.

Utilisation rates above 90 percent usually prompt chipmakers to start building new factories