INTERVIEW-Applied sees China orders up this year
By Edwin Chan
SHANGHAI, June 18 (Reuters) - Applied Materials, the world's top maker of chipmaking gear, will garner orders worth more than $300 million in its current fiscal year in China, where the chip market continued to impress, a senior executive said on Tuesday.
While China accounted for only five percent of Applied's revenue, it was by far the fastest growing market last year, powered by orders from a pair of upstart foundries now lumbering toward full production, Chen Rong Ling said.
"Mainland China was our only rapidly expanding market, though it's still a small portion of our business, not quite five percent," said Chen, the firm's deputy China general manager.
"Last year, we had $300 million in bookings. This year, the total bookings should be even higher," he told Reuters on the sidelines of the China Semiconductor Forum in Shanghai.
Like the rest of the semiconductor industry, Applied was hammered by last year's collapse of the technology sector. But some good news came in May as the company reported a second quarter profit that topped Wall Street estimates.
Better still, it reported orders leapt 51 percent in the quarter, powered by consumer electronics demand, and said orders might jump another 10 to 15 percent in the third quarter of a fiscal year that ends in October.
Applied's shares finished Monday at $21.04.
But it's not all smooth sailing from here on in. Chip players are likely to come across more bumps in the road ahead as the market continued to move forward in fits and starts, Chen said.
A more sustained recovery was likely to emerge only early next year, he said.
"From the first half we already saw some hints of recovery, but it will progress in peaks and troughs," Chen said. "Next year the rebound will be more obvious," the Shanghai native said.
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Chen said consumer electronics would power an eventual rebound. "You have your Playstations, your X-boxes and even your DVDs, that's what's driving the market," he said.
China's galloping $20 billion chip market is growing at an estimated 15-20 percent annually.
But Applied Materials mainly serves two customers in China -- fledgling foundries Semiconductor Manufacturing International Corp (SMIC) and Grace Semiconductor Manufacturing Corp (GSMC).
SMIC is now rapidly ramping up to a capacity of about 30,000 wafers a month by the end of this year, while GSMC is buying equipment to furnish a spanking new facility it hopes will begin turning out chips by 2003.
California-based Applied will sell some $400 million of chipmaking gear to these two foundries in 2002, Tomi Li, director of regional technology, told reporters on Tuesday.
But Applied had no intention of betting the ranch on just two China customers, Chen said. SMIC and GSMC were the vanguard of a wave of microchip industry expansion that would sweep over China, he said.
It was just a matter of time before truly global players like Intel (NasdaqNM:INTC - News), Infineon (XETRA:IFXGn.DE - News) or TSMC (Taiwan:2330.TW - News; NYSE:TSM - News) invaded the mainland arena, he said.
But investments might initially be limited to stakes in existing or proposed plants or technology licensing. Actual chipmaking investments would have to wait until the industry -- and its supporting infrastructure -- matured, he said.
"When the big chipmakers come in, only then will China's become a true semiconductor hub," he said. "SMIC and GSMC are heralding the next stage of the industry's development." |
