The technology sector, and its related exchange traded funds (ETFs), is sidestepping the economic throes with grace and it looks like business is picking up.

The semiconductor sector looks to be climbing out of its bottom and the industry is showing bullish signs, remarks Tom Brennan for CNBC.

Growing demand for chips, especially as a result of China’s 3G wireless build-out, has many tech companies feeling better. Xilinix (XLNX) is seeing increased orders and inventories shrinking, which should result in higher prices and revenue for its products. The company provides a multiuse PLD that allows for adaptability in a cost-effective manner.

In the S&P 500, the technology sector stood out, especially when compared to financials. The main reason would be that the tech sector is market-capitalization based, or heavily weighted with a few large stocks, writes

The tech sector is seen to be playing a defensive game nowadays. Companies are seen holding large wads of cash. It has been shown that in deflationary times, value of debt remains constant, but value of assets declines. So the tech companies with good balance sheets and heaps of cash will endure.

Tech companies are also change the face of their businesses. Hewlett Packard (HPQ) and IBM are seeing better returns through their service revenues. It may not be that exotic but being a service company is paying off fore these companies.

  • iShares S&P North Amer Tech-Semicondctrs (IGW): up 8.9% in the last week; up 10.2% in the last month; up 1.8% in the last three months; holdings of 5.01% in XLNX

ETF IGW performance

  • PowerShares QQQ (QQQQ): up 7.3% in the last week; up 0.4% in the last month; down 2.7% in the last three months; holdings of 3.0 in CSCO; MSFT is 4.9%

ETF QQQQ performance

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.