Sales of personal digital assistants (PDAs) surged 72% to 12.1 million units worldwide in 2001, generating revenues of $3 billion. Analyst Matthew Wilkins at iSuppli Corp. projects sales growth of 55% to 18.8 million units in 2002. By 2006, he suggests that annual PDA sales will total 50 million units, with revenues of $8.2 billion. However, first-quarter sales of handheld computers recorded a 12% decline from first quarter 2001 and a 25% decline from first quarter 2000.

Specialty semiconductor sales are showing modest growth. Analyst Arun Veerappan at Robertson Stephens says sales of analog and mixed signal chips, used in everything from battery chargers to industrial gauges, are doing very well. Specialty chip producers also have reported signs of sales rallies for the chips used in handsets, high-speed Internet modems, video game consoles, and television set-top boxes.

Pasquale Pistorio believes the overall semiconductor market will shrink 2% this year but he also believes that first quarter was the bottom of the buying slump. Pistorio, who is chief executive at STMicroelectronics, Europe's biggest chipmaker, says prices remain sluggish but demand for memory chips is starting to perk up. Global chip sales plunged 32% in 2001 in the worst industry slump ever, after growing 37% in 2000.

Market mavens now expect U.S. personal computer purchasing to grow between 2.3% and 3.2% in 2002. Sales in the U.S. slid only 0.4% in first quarter 2002. PC sales slid in 2001 for the first time since 1985, dropping 4.6% globally. Global sales remained weak in first quarter 2002, falling 2.7% to 31.4 million computers. But, U.S. purchases were much higher than expected. "Good news is that the U.S. market has truly reached low tide and is turning around, albeit slowly,'' says analyst Roger Kay at International Data Corp.

Big handset producers caution that high-speed third-generation (3G) wireless technology will roll out more slowly than cellular service providers expect. "The 3G hype got ahead of the applications," admits Steven Carter, president of Cingular Wireless. He now thinks it may take years for the U.S. to catch up to 3G wireless technology that already has taken hold in Asia and most of Europe. Reason: Proliferation of personal computers in the U.S. has been a key factor in limiting demand for high-speed wireless connectivity.