Executives at semiconductor-equipment companies such as Applied Materials Inc, SpeedFam-Ipec Inc and Cymer Inc said they're becoming less optimistic that sales and profits will increase this year.
Analysts and investors had hoped for a turnaround in demand for electronic devices such as personal computers and cellphones in the second half as the back-to-school and holiday sales seasons approach. At the Semicon West trade show in San Francisco, chip-equipment company officials now are saying that orders for their tools are unlikely to improve that soon.
"It will be the second half of [next year] before we see any recovery," said Robert Akins, chief executive of Cymer, which makes lasers used in chip production.
Semiconductor-equipment companies have been idling plants, cutting salaries and firing workers this year as they try to weather the steepest slump in the industry's history. Sales of chip-building tools are forecast to fall as much as 35 percent this year, after rising 87 percent to US$47.7 billion last year, according to Semiconductor Equipment and Materials International, a trade group that tracks the industry.
The industry's book-to-bill ratio, which investors study for trends in orders and sales, rose slightly to 0.46 in May from April's 0.44. May's ratio, the first increase in eight months, means that US semiconductor-equipment makers took US$46 in orders for every US$100 in shipments. A ratio below 1 indicates a contracting market.
"It's too early to say if this is a new pattern or if this is a blip," SEMI President Stan Myers said at the conference.
Speaking at the company's annual meeting with analysts at Semicon West, the biggest show for the semiconductor-equipment industry, Applied Materials Chief Financial Officer Joseph Bronson said the outlook for orders wasn't improving. Applied Materials is the biggest maker of semiconductor equipment.
"I wouldn't say whether we have or haven't reached the bottom," Bronson said. "We're kind of trundling along, and I don't see any change."
Almost 40 percent of equipment makers expect orders to bottom out in the fourth quarter of this year, with about 35 percent predicting a bottom after this year, according to a SEMI survey.
Arthur Zafiropoulo, Chief Executive of Ultratech Stepper Inc, said there's a 33 percent to 35 percent chance of a recovery in the second quarter of next year, with an 80 percent chance it will come by the fourth quarter.
Once chip demand starts to rebound, equipment sales will rise quickly, executives said. Because makers of chips, computers and electronics devices can use software to monitor sales more closely now than in previous years, they can turn orders around more rapidly. SEMI expects worldwide sales to rebound 12 percent next year and 23 percent in 2003.
"We just had an 80 percent growth year, and we have to pay for that," said Brad Mattson, CEO at Mattson Technology Inc.
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