Chip companies usually look forward to the fourth quarter to boost sales.

It's seasonally the strongest quarter because people buy more consumer electronics during the holiday season as gifts or otherwise.

So while this should bode well for counters like UTAC and STATS ChipPAC, local analysts are divided on whether these companies can still deliver value to shareholders.

Both reported good Q3 numbers, projecting single digit revenue percentage growth in Q4.

But NRA Capital's Russell Tan told The Edge Singapore STATS ChipPAC's outlook was weak, considering how seasonally weak Q3 is and how much stronger Q4 should be then.

UTAC, on the other hand, is gaining ground on its diversification.

One of its new customers is a Japanese company that produces chips used in Nintendo's latest game console, the Wii.

It is also leaning on the growing memory segment.

The Semiconductor Industry Association says growth in DRAM memory chips used in PCs were especially strong in Q3, posting 40% year-on-year growth.

This segment is expected to be fueled by new PCs designed to run Microsoft's Vista operating system due out next year.

It will require 512 MB to run.

Windows XP only needs 128 MB.

An article on www.thestreet.com says chip sales are 'on pace to meet” the 9.8% revenue growth forecast in 2006.

So while this bodes well for the chip sector in general, you may just want to keep an eye out for which chip stock you want to buy into.

Don't put all your eggs in one chip basket.

Serene Lim