Nov. 2--Despite upbeat pronouncements by Intel about its resurgent sales and evidence the economy finally is growing, the prospects for other chip companies and their thousands of Silicon Valley employees remain unsettlingly murky.

Those optimistic about the industry's immediate future cite a big jump in chip shipments in recent months and the potential for a bump in holiday sales of tech gadgets -- and the chips inside them. They also point to the launch of Windows 7, which could spark purchases of personal computers outfitted with the latest microprocessors. That could especially benefit Intel and Nvidia, both of Santa Clara, and Advanced Micro Devices of Sunnyvale, according to a Deutsche Bank study.

But others fear the sales upsurge in chips may be a mirage based on short-term changes in inventories maintained by computer makers, with a full-fledged, consumer-fueled recovery not likely to happen until after 2011 or even past 2013 for some chip sectors.

If the pessimists are right, it could mean a painfully drawn-out recovery for an industry that generates tens of billions of dollars in revenue and whose fortunes are heavily intertwined with Santa Clara County's tech-dependent economy.

"The question is demand," said Michael Palma, a semiconductor specialist at the Framingham, Mass. market-research firm IDC. "When does it return? Everyone is trying to figure out exactly how consumer spending is going to come back."

Specialty

chipmakers -- ranging from Xilinx, Cypress Semiconductor, and LSI to Maxim Integrated Products, National Semiconductor and Altera -- employ a good chunk of the local workforce. It's hard to get a precise count of how many people are on their payrolls, because many of their jobs are lumped in with those at other types of businesses. But county chip companies accounted for 37,475 manufacturing jobs as of September, according to state officials. And that's down 5,615 from the same period a year ago, largely due to the recession. So if the industry bounces back, some of those jobs might return, too.

Much of the uncertainty about the sector stems from the way computer makers and others rapidly scaled back their semiconductor inventories when the economy started going south -- a lesson learned from the 2001 dot-com crash, when a glut of stockpiled chips prolonged the industry's financial woes, analysts say.