| | .hhhmmmm....last I checked...KLIC was backend
Message 19045697
Backend to lead IC-equipment recovery, analysts say
Semiconductor Business News
(06/19/03 11:52 a.m. EST)
SAN JOSE, Calif. -- Any recovery in the semiconductor equipment industry this year is not expected to be led by the front-end fab-tool markets, but rather the backend, according to analysts.
Gartner Inc., for example, believes that the semiconductor assembly and test industry will grow 20 percent in 2003 over 2002. In 2002, this industry hit $8.35 billion, up 18 percent over 2001.
The growth was (and is) driven by the ongoing shift towards outsourcing in the IC-packing, assembly, and testing arenas. IC-packaging houses also see increased demand for higher-margin products, such as chip-scale packages, flip-chip, and system-in-packaging technologies.
In the overall semiconductor-equipment market, however, Gartner is still rather bearish. The firm projects only 7 percent growth in the entire industry in 2003 over 2002.
Others agree with the current trends. “We're seeing a lot of activity in the backend,” said Dan Hutcheson, president of VLSI Research Inc., based in San Jose. The front-end fab-tool market has basically stalled, especially in lithography, he told SBN.
Last month, VLSI Research projected the IC market will grow 9.3 percent to $131.8 billion in 2003 over 2002. The fab-tool market is expected to reach $31.3 billion in 2003, up 5.6 percent from 2002, according to Hutcheson (see May 16 story ).
Indeed, the front-end tool market is sluggish. In a report issued by SG Cowen Securities Corp. this week, Applied Materials Inc., KLA-Tencor Inc., and Lam Research Corp. are expected to report flat results for their current quarters, which is in line with their previous forecasts.
North American-based manufacturers of semiconductor equipment posted a book-to-bill ratio of 0.89 for May, roughly flat from 0.90 in April, according to the Semiconductor Equipment and Materials International (SEMI) trade organization this week (see June 17 story ).
The front-end equipment book-to-bill ratio was 0.83 in May, compared to 0.82 in April, according to SEMI. But the backend ratio was 1.16 in May verses 1.25 in April, according to SEMI.
Forecasters at SEMI remain cautious about the market in general. “The prevailing semiconductor outlook over the past two years has been that the recovery is coming in the next six months,” said Lubab Sheet, research development director at SEMI, in an e-mail newsletter issued by the San Jose-based trade group.
“Once again we are in an environment in which the conventional wisdom says the recovery will start in the next six months,” Sheet said.
However, Sheet sees a silver lining in the chip-equipment forecasts. “Single-digit capital equipment growth is actually quite good compared to back-to-back years of double digit declines,” she said.
“Many of these forecasts have been reduced from the initial rates predicted in January 2003 due to the war with Iraq, SARS and several other factors. Nonetheless, all anticipate modest to fairly strong growth for the capital equipment market in 2003, which is consistent with most semiconductor revenue forecasts,” Sheet said.
There are other positive signs. Japanese IC makers “are starting to construct new fab facilities and increase capital spending,” she said. “Capacity utilization rates at Taiwan's leading foundries are on the rise and the outlook for the third quarter is 'cautiously optimistic,' ” according to the newsletter.
“On the other hand, the April World Semiconductor Trade Statistics (WSTS) suggest a stall in the semiconductor market, despite fairly strong first quarter (year-over-year) results. The problem remains declining average selling prices, which plunged 11 percent in April 2003 over March 2003, based on three-month averages,” the newsletter said. |
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