Stubborn SOX:
Capital spending to fall again
hard this year, says Dataquest
Dataquest didn't have much in the way of good news early in January year for the world's semiconductor production equipment industry.
Because there still is a giant glut of capacity, chip makers will cut their capital spending for plants and production equipment by 24% this year, according to the big market research firm. That would be down nearly as much as it was in last year's debacle when this spending fell 29%. That would amount to a drop of more than $10 billion from last year's $44.4 billion.
Dataquest expects spending on just chip production systems to recover in the second half, but that chip gear revenues this year will still end up down 19% from the $25.2 billion spent by chip makers in 2001, according to the market research firm's new forecast. These expenditures fell 29% in 2001, it estimates.
"A macroeconomic recovery and returning electronic equipment demand should finally bring the 'demand-component' of the down cycle under control," says Klaus Dieter Rinnen, who heads Dataquest's semiconductor manufacturing research. "However, overcapacity remains excessive and still demands industry attention," he adds.
Capital spending cuts was rampant throughout the world last year. But foundries and DRAM vendors made the deepest cuts, which resulted in Asia Pacific-based chip makers reducing their capital spending by nearly 47% in 2001, Dataquest says. And Taiwan's chip manufacturers cut their capital spending by more than 50% in 2001 downturn, according to the research firm's latest estimates.
The blood bath, though, wasn't that bad in the U.S., Europe, or Japan. U.S. chip companies cut their capital spending by 21%, Europeans by 26%, and the Japanese by 18%, according to Dataquest.
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