And THIS should help VSEA:
What's Up From SEMI - Industry Research & Statistics
September 2000
Equipment Makers Ponder Revised Forecast Estimates
By Craig Klootwyk
Market Analyst, SEMI
Over 250 industry leaders turned out on August 23 for a luncheon discussion centered on the forecasts for the
semiconductor and semiconductor equipment markets. SMECS, the Sales and Marketing Executive Council of
SEMI, hosted the luncheon held at The Westin Hotel in Santa Clara. Speakers on the booming growth of the
industry included Dan Hutcheson, President of VLSI Research, Klaus Dieter Rinnen, Chief Analyst and
Director of Semiconductor Equipment Manufacturing and Materials, Dataquest, and Clark Fuhs, Vice
President, J.P. Morgan.
Hutcheson and Rinnen both commented on revisions to their earlier forecasts for semiconductor and
semiconductor capital equipment markets. In January of this year, Rinnen had predicted a 22 percent annual
growth for the IC market, with even faster growth expected in the DRAM sector. Hutcheson of VLSI estimated
25 percent annual growth for IC sales at the beginning of 2000. Stronger than expected demand in the first half
of this year has prompted both analysts to revisit their initial estimates. A consensus revealed that the
semiconductor market is headed towards 40 to 45 percent growth in sales for 2000. The growth is being fueled
by "the consumerization of the digital era," claims Fuhs, who tracks chip industry supply and demand.
Heavy demand for electronic systems has resulted in a current business cycle that may end up to be longer
and stronger than previous cycles. Current device demand is largely driven by wireless communications,
PDAs, digital cameras, and toys such as MP3s. "I think people are underestimating the strength of this cycle,"
said Fuhs.
Given the increase in semiconductor demand and the current state of the market, Hutcheson revised his
January 2000 semiconductor equipment forecast of 27 percent to a dramatic 87 percent growth for 2000.
Rinnen similarly projects the strength of the cycle could cause investments in capital equipment to grow 60 to
70 percent for the year. Both agreed that capital equipment spending in 2001 would grow approximately 30
percent, and estimates for 2002 growth are 5 to 10 percent. Fuhs confirmed the strong potential of the cycle,
stating that there was no evidence of oversupply for at least 18 months. The strength of the equipment industry
is in large part due to the steady addition of capacity by logic chip manufacturers. Rinnen estimates that
current investment is split nearly 50:50 between new fabs and existing plants.
Fuhs mentioned that fab utilization rates in the U.S. have trended towards an unprecedented 95 percent,
according to Federal Reserve Board data. Logic manufacturers and foundries drove capital spending in the first
half of 2000, and spending for additional DRAM capacity is expected to follow. Expectations are that fab
capacity will remain tight at least through 2002.
All three analysts pointed out the strength in the current business cycle and its relationship to the booming
electronics industry. Rinnen and Hutcheson agreed that the upside potential for investment in various device
types provides evidence that this cycle is likely to carry on for another 18 months. Fuhs was quick to point out
that the semiconductor industry has never experienced such strong growth in terms of number of devices
shipped. Annual forecasts for capital equipment markets have been revised upwards to support the expected
growth for 2000-2002. If the market stays on track with these analysts' projections, 2000 will be the biggest
boom year on record for the semiconductor capital equipment industry. |
