Applied Materials lowers expected first-half earnings

Applied Materials Taiwan Inc (台灣應材, AMT), a unit of the world's biggest manufacturer of semiconductor-chip making equipment, said it expects earnings in the first half may fall on slowing global demand for semiconductors.

Sales in the first quarter are down 33 percent from the fourth quarter of 2000, said Edward Tjan (陳德華), the regional marketing director of Applied Materials Taiwan.

Demand for chips fell as growth cooled worldwide, he said.

"We expect lower revenue in the coming one to two quarters," Tjan said. "It's uncertain if orders will pick up after April," he said.

Demand for the company's equipment, which covers about three-quarters of the chip making process, slowed in step with weaker sales of personal computers, cell phones and pagers.

Tjan said the company's book-to-build ratio is at 0.89, an indication of lower revenue in the coming one to two quarters.

A ratio of 0.89 means Applied Materials took US$89 of orders for every US$100 shipments. A ratio below one indicates a constricting market.

Taiwan is the biggest overseas market for Applied Materials, accounting for 20 percent of of the company's worldwide orders.

In Taiwan, the capital expenditure of the semiconductor industry this year is expected to grow 34 percent, a sharp decline compared to last year's 81 percent.

"We're in a downcycle in the semiconductor business right now [so,] we should clearly monitor the direction [of the industry's] development," said Chiam Wu (吳子倩), president of Applied Materials.

Wu emphasized the importance of infrastructure and a complete top-to-bottom supply chain, adding that his company will host a high-tech industry forum in April to advise the government on pressing industry issues.

Applied Materials Taiwan is currently building a manufacturing center in Tainan Science-based Industrial Park (台南科學園區) which will offer components and parts for chip-making machinery. The center is scheduled to start production in April.

In related news, Applied Materials marked the groundbreaking of its new Applied Materials South East Asia (AMSEA) regional headquarters in Singapore's Changi Business Park at a recent ceremony. The new AMSEA headquarters will include the company's training center for where engineers and customers.