Two chip equipment firms see gradual sector rebound
biz.yahoo.com
By Jennifer Tan
SINGAPORE, May 7 (Reuters) - Recovery in the battered global semiconductor equipment sector is likely to be gradual, driven by advanced technology upgrades rather than robust end-user demand, two chip equipment makers said on Tuesday.
"We believe the pace of the recovery in the chip sector will be gradual," said Alex Oscilowski, the president of U.S.-based chip equipment and materials maker Kulicke & Soffa (NasdaqNM:KLIC - news).
"We have not seen anything that would indicate that the pace would increase." "Right now, (the rebound) is driven by the need for advanced technology, and we believe that will continue until utilisations get to the point where it will be a broad-based capacity-driven recovery," he told Reuters on the sidelines of the three-day SEMICON Singapore 2002 trade show.
Sentiment in the beleaguered tech sector recently turned positive after U.S.-based Semiconductor Equipment and Materials International (SEMI) showed U.S. and Canadian chip equipment makers posted a book-to-bill ratio of 1.04 in March. This was the first time since November 2000 that the ratio has risen above unity.
A ratio of 1.04 means US$104 worth of new orders were obtained for every $100 of product shipped that month. Ratios above unity indicate business is expanding.
Analysts expect 2002 to be a year of sluggish growth for the industry with six percent growth in global sales after slumping more than 30 percent in 2001 -- the worst decline in the industry's history.
PATCHY DEMAND
But the recovery in the chip sector is patchy, and may remain so for most of 2002 at least, the firms warned.
"Demand is up, but is somewhat narrowly focused on more advanced technology equipment sets," ASM Pacific Technology Ltd (HKSE:0522.HK - news) vice president Jerry Dellheim told Reuters.
The world's second largest maker of assembly equipment for semiconductors said in April its order backlog had risen to $35 million in late March from about $20 million early this year.
"Capacity-related demand is some distance away, certainly not this year, hopefully next year -- there's a significant overhang of general capacity in the industry," Dellheim said.
This was evidenced by recent gloomy comments from Finalnd's Nokia (NOK1V.HE), the maker of one in every three mobile phones sold globally, which cut its 2002 sales growth forecast on weak demand. Top microprocessor maker Intel Corp (NasdaqNM:INTC - news) also issued cautious revenue guidance for its second quarter.
"When you hear cautious comments from the Nokias and Intels of the world, you have to take it seriously in terms of capacity-related demand growth," he added.
Chip equipment makers generally lag the semiconductor industry's performance by a few months.
Gartner Dataquest analyst Dean Freeman also struck a tentative note.
"2002 is a moderate growth year -- we are in the trough and starting to come out, but the timing and breadth of the recovery remains uncertain and subject to numerous risks," he told a conference of businessmen and analysts at SEMICON.
Kulicke shares closed at $16.35 on Monday in New York. ASM Pacific shares closed at HK$20.10 on Tuesday in Hong Kong. |
