The semiconductor industry has consumer confidence and early holiday shoppers to thank for it reaching a new sales milestone in October.

Worldwide sales of semiconductors surpassed $20 billion in the month, a new high point for the industry, according to the Semiconductor Industry Association. "Strong demand for consumer electronics drove worldwide chip sales over $20 billion in October," said SIA President George Scalise in a statement. "A sharp rebound in consumer confidence was reflected in strong sales of a broad range of consumer products, such as cell phones, MP3 players, digital cameras, digital TVs, and personal computers."

Scalise said that demand for semiconductors was strong in all industry sectors, noting that all of the semiconductor product lines tracked by SIA saw sequential sales increases in October.

October’s 6.75 percent year-over-year increase and 2.5 percent increase from September was driven by Q4’s spending on consumer electronics for the holidays, a trend that Wall Street watchers at the Lehman Brothers say will continue and buffer the annual Q1 sales decline.

“Looking ahead, we expect to see semi unit shipments trend generally healthy through November as we move through the peak holiday build period for PCs, handsets and consumer electronic devices,” Tim Luke, managing director of equity research at the firm said in a research note this morning. “While we recognize that the macro backdrop remains uncertain, we note that initial holiday sales indications appear promising with some suggestions of lower than normal seasonal declines in Q1 from key vendors, including Intel.”

The SIA further said that industry sales continue to track with its forecast of 6.8 percent growth to $228 billion in 2005. “Inventories are in balance, and production capacity utilization remains in the healthy 90 percent range," Scalise concluded.