PURCHASING's Electronics Business Activity Index edged up slightly last month, but no big turnaround is in sight. Intel's Chief Executive Craig Barrett splashed a little cold water in late August on the sentiment of analysts expecting an imminent pickup in computer and component sales: "We haven't seen much improvement in the computing environment because companies are not investing." In a speech, Barrett says that the chipmaker is expecting no better than "modest sales growth" in the near term for its products.

Telecom: Not a good auction opportunity. Look for higher fees on telecom services. Twenty years of price-cutting are history. Reason: Worldcom's implosion plus the collapse of many small providers. AT&T and Sprint will take the opportunity to raise rates.

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Purchases of tools used to build and test semiconductors will decline in the second half of 2002 but will recover in 2003, says analyst Richard Tortoriello at Standard & Poor's. However, he agrees with Credit Suisse First Boston analyst John Pitzer that recovery won't be a strong as the 30% buying decline they project for 2002.

Keep an eye on China as an emerging source of semiconductors. The problem is Chinese chip manufacturers are using 0.18-micron manufacturing processes.

Expect prices for liquid crystal displays to fall through the rest of the year. After increasing for most of the year, LCD tags fell 1-2% in August as monitor demand slowed in the second quarter and inventory started to build. Prices will be clobbered again next year when new production capacity comes on stream.

Look for DRAM module tags to stabilize as demand builds through the rest of the year. DRAM tags on the spot market have been on a roller coaster ride over the last several months. Prices for 256-megabyte double data rate modules increased from $39 in June to $65 in July, according to electronics trading exchange Converge. Prices fell to $52 in August and should fall another 5-10% before stabilizing later in the year.