Mon, Dec 06, 2004 - Page 10 News List

Semiconductor-equipment sales shrink, survey finds

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Global sales of semiconductor equipment will fall short of forecasts this year and shrink next year, according to a survey of manufacturers released on Wednesday.

Sales of chip manufacturing, testing and assembly machines will increase 59 percent to US$35.3 billion this year, industry association Semiconductor Equipment and Materials International forecast, cutting its earlier estimate of a 63 percent gain to US$36.2 billion.

Next year, revenue will drop 5 percent to US$33.5 billion, SEMI forecast, revising down its July forecast of a 24 percent increase. Companies such as Applied Materials Inc have said they expect orders to fall in the current period as chipmakers, struggling to reduce inventory, delay equipment purchases. Intel Corp, whose chips power 80 percent of the world's computers, has a record level of more than US$3 billion of inventory after overestimating demand earlier this year.

"Following a robust growth year in 2004, SEMI members expect a pause in 2005 as semiconductor manufacturers digest the new manufacturing capacity," Stanley Myers, president of the association, said at an annual industry exposition being held in Chiba, outside Tokyo.

Market researcher IC Insights expects a bigger decline in spending on chipmaking equipment next year than SEMI. Spending will drop 10 percent next year from the US$45.4 billion expected this year, IC Insights analyst Bill McClean said in an e-mailed report on Wednesday.

Japan's equipment market, which has more than doubled from 2002 to last year, will decline by about 14 percent to US$6.9 billion next year. Taiwan is forecast to shrink 8 percent, with 1 percent drops in Europe and South Korea, the release said. North America and China are the only regions forecast to grow in 2005, the group said.

The slowdown in chip equipment spending next year will be "moderate" because the industry "has responded quickly to excess capacity," Myers said, adding that spending will be the third highest by value next year behind the US$47.68 billion in 2000 and the US$35.3 billion projected for 2004.

The association forecasts growth of 3.1 percent in 2006 and 14.8 percent in 2007, as the rising popularity of portable music, cellphones and other mobile electronics will spur demand for memory chips used to store data in the devices.

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