Chipmaking tool sales to fall 25%

Global sales of chipmaking equipment this year will fall by a quarter from a year earlier because chipmakers pared spending plans, an industry association said, cutting an earlier forecast.

"The market this year looks more like it'll be worth US$20 billion," Elizabeth Schumann, director of research at Semiconductor Equipment and Materials International, said at an industry event in Taipei.

The association predicted in July that global sales would reach US$22.8 billion.

The world's biggest buyers of chip equipment such as Intel Corp and Taiwan Semiconductor Manufacturing Co (台積電) have slashed expansion budgets as the sales outlook for the second half slumped. Intel in July cut spending plans, for the second time this year, to US$5 billion from US$5.2 billion, while TSMC pared its budget to less than US$2 billion from US$2.5 billion.

"There's low visibility for the fourth quarter through early next year," Schumann said.

Participants at a chip-equipment show in Taiwan hosted by Semiconductor Equipment and Materials said demand for chips in the fourth quarter will be worse than the third.

"The outlook for the second half isn't good, especially in the fourth quarter," said Jason Huang, a sales executive at Topco Scientific Co (崇越科技), which supplies blank silicon wafers to TSMC and other chipmakers in Taiwan. Huang declined to elaborate on fourth-quarter sales.

Topco, which is a distributor for a unit of Japan's Shin-Etsu Chemical Co, the world's biggest maker of silicon wafers, says it has a 60 percent share of the Taiwan market for 12-inch wafers.

Taiwan companies account for two-thirds of global demand for the dinner-plate sized wafers that are expected to cut production costs by a third.

TSMC earlier this month said it plans to scale back production plans to 5,000 12-inch wafers a month by December from the original target of 10,000 wafers. Equipment suppliers said they're talking with TSMC about how to cope with the canceled orders.

"We're in discussions with TSMC on equipment that's in backlog," said Donald Crabtree, vice president of sales for ASML Holding NV, Europe's biggest maker of semiconductor equipment.

Rival United Microelectronics Corp (UMC, 聯電) won't change plans to make 10,000 12-inch wafers a month by the end of this year, spokesman Alex Hinnawi said.

Global equipment sales in the first half reached US$8.7 billion, Schumann said. Of that amount, companies in North America accounted for 31.3 percent, Japan for 19.7 percent, Taiwan for 18.2 percent, South Korea for 7.4 percent, Europe for 11 percent and the rest of the world for 12.3 percent.

Taiwan may displace Japan in the second half to become the world's second-largest buyer of equipment, according to Schumann.