But there are some new and positive signs in the market right now. For example, business is indeed improving at some silicon foundries, such as Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) and United Microelectronics Corp. (UMC).

Other chip makers are seeing a slight rebound. Or is the good news a short-lived event or ''head-fake''?

''Nearly every semiconductor company made negative preannouncements just 90 days ago, only to have consensus forecasts fall still further during January earnings season,'' said Steven Pelayo, an analyst with the Hongkong and Shanghai Banking Corp. Ltd. (HSBC), in a recent report.

''Fast forward to today and all we hear about are rush orders, rising wafer starts and utilization rates, and visibility extending to June,'' Pelayo said. ''The upstream supply chain has clearly fallen to unsustainably low levels and is now rebounding. In the near term, we expect confirmation of the recent strength as positive preannouncements begin, strong March monthly sales are reported, and earnings results and guidance easily exceed consensus, in our view.''

But ''risks'' remain in the sector. ''Despite near-term strength, we do not believe the demand environment is recovering as quickly as the stocks may suggest,'' he said. ''We are reminded of the 'head-fake' move of 2001 that was initially driven by a similar easy-compare/restocking phase, only to later retrace the majority of the gain by the end of 2002.''

The order activity could be an inventory replenishment cycle--or much ado about nothing.

Still, business is improving at TSMC. ''Given the depletion of the wafer banks and upside to wafer shipment expectations, we now expect (TSMC's) utilization rates to average 40-to-42 percent in 1Q '09 and a low 50-to-52 percent range in 2Q '09. We expect utilization rates to reach a 60 percent-plus range in 2H '09,'' according to a new report from FBR.

''Recent checks suggest that the wafer shipment decline at TSMC in 1Q '09 will most likely be limited to ''30-ish'' percent, which combined with an expected 8-to-10 percent quarter-over-quarter ASP decline, should lead to revenues coming in at the high end of the company's already revised guidance of NT$36-to-NT$38 billion ($1.04-to-$1.09 billion),'' according to FBR.

Previously, TSMC expected sales of between NT$32 billion ($924.2 million) and NT$35 billion ($1.01 billion) in the quarter. TSMC expects a loss in Q1. It's unclear if the company has revised that forecast.

''Additionally, we now expect 2Q revenues to increase by at least 20 percent quarter-over-quarter, better than our prior expectations of flattish,'' according to the FBR report. ''This is driven by a 30 percent-plus increase in wafer shipment, but somewhat offset by a continued ASP decline.''

Rival foundry UMC is also seeing a rebound, thanks to new orders from MediaTek, TI and others, said HSBC's Pelayo. But UMC is not expected to see an operating profit until early 2010, Pelayo said.

China's Semiconductor Manufacturing International Corp. (SMIC) is also seeing a rebound. ''Our checks suggest the company is seeing strong near term demand from Texas Instruments, Datang Telecom and Broadcom,'' he said. ''We continue to struggle with finding sustainable profitability for SMIC.''