Semicon sector set for decline: firm

Global semiconductor equipment suppliers are gearing up to grasp their best chance to sell equipment at the annual trade show in Taipei before the cyclical industry starts to dip in 2006, the event's organizer said yesterday.

Over 600 semiconductor equipment makers will showcase their latest products and technologies at 1,400 booths this year, said event organizer Semiconductor Equipment and Materials International (SEMI) in a statement released yesterday.

The three-day trade show, SEMICON Taiwan 2004, will open on Monday at the first and third Taipei World Trade Center exhibition halls. The show is open to the public between 10am and 5pm on the first two days, and between 10am and 4pm on the last day. Admission is free.

Last year, 587 companies from around the world participated in the trade fair, according to SE-MI's tally. Some 31,000 buyers and industry professionals visited the exposition last year, the organizer said.

"The outlook for growth is to be sustained next year, although not at levels as high as this year. SEMI members generally believe the peak of this market cycle will occur in the second quarter of 2005," said Stanley Myers, SEMI president and CEO.

Chipmakers, semiconductor testers and packagers are expected to purchase a total of US$36.2 billion worth of new equipment this year, up 60 percent from US$22.2 billion in 2003, according to a report released by SEMI in July.

In 2005, growth is expected to slow to 24 percent to total US$44.8 billion, according to the report.

Semiconductor equipment suppliers expect a roughly 5 percent reduction in sales in 2006 to US$42.62 billion before a recovery in 2007, when equipment spending will regain momentum by rising 13 percent to US$47.95 billion, according to SEMI statistics.

The forecast is largely in line with the semiconductor industry's five-year cycle as the next trough might happen in 2006, as Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) chairman Morris Chang (張忠謀) said in July.

TSMC, the world's No 1 contract chipmaker, plans to spend US$2.4 billion on new facilities this year. Chang told investors in July that capital expenditures for 2005 would be modestly above US$2.4 billion.

In terms of regions, China, led by chip startup Semiconductor Manufacturing International Corp (中芯國際集成電路), will have the biggest growth of 152 percent to US$2.9 billion this year compared to 2002, according to SEMI.

Taiwan will come next, posting 140-percent growth in equipment spending to US$7.01 billion, according to SEMI's report.