Forecast for growth by VLSI higher than most analysts have it pegged. Many have negative/flat growth predicted.
Chip Gear Spending Remains Weak Except For Europe, U.S., and Taiwan
(04/01/98; 10:02 a.m. EST)
By J. Robert Lineback, Semiconductor Business News
Industry spending on new semiconductor production equipment will grow by only 3.4 percent in 1998 after increasing at nearly the same low rate last year because of persistent losses in DRAMs and reduced investments in Japan and Korea, according to a revised forecast by VLSI Research.
At the start of 1998, the San Jose, Calif., research firm had predicted an optimistic 24.7 percent growth in worldwide semiconductor capital spending before the full impact of Asia's financial crisis was felt by industry. But now, its forecast calls for chip equipment spending to reach $38.8 billion in 1998 -- up only slightly from $37.6 billion in 1997, when investments grew an anemic 3.2 percent over the previous year's $35.6 billion.
However, some of the troubled chip makers in both Korea and Japan are finally coming to grips with their financial problems with several large companies expected to resume strategic investments, said Bob Mariner, director of European operations for VLSI Research, who presented the market outlook during a press conference at Semicon Europa in Geneva.
According to the new forecast, European capital equipment spending growth will be the strongest in 1998, with chip makers purchasing $5.3 billion in production systems -- a 15.1 percent increase over 1997. In the United States, the world's largest semiconductor equipment market, spending will grow 13.2 percent to $14.3 billion compared to $12.6 billion (last year investments grew by 24.8 percent), according to VLSI Research.
In Japan, capital spending in chip plants will continue falling because of the country's economic troubles and losses in commodity memories. VLSI Research now expects Japanese semiconductor equipment purchases to drop 19.7 percent to just $7.1 billion this year compared to $8.9 billion. In 1996, Japan was the world's largest regional market for semiconductor equipment at $10.7 billion.
The rest of Asia is a mixed bag when it comes to semiconductor capital spending in 1998. Financial meltdown in Korea, for example, is expected to slash capital spending by 38.8 percent this year, lowering chip equipment purchases to $2.3 billion, compared to $3.8 billion in 1997 and $4.1 billion in 1996. But in Taiwan, chip manufacturers are expected to increase their equipment purchases by 27 percent to $6.5 billion compared to $5.1 billion in 1997, when investments grew at 24.4 percent, according to VLSI Research's new outlook.
The rest of Asia (excluding Korea, Taiwan, and Japan) will also see strong investments in chip production systems, according to the research firm. Fueled by new wafer fab projects in China and Singapore, as well as chip assembly plants throughout the region, semiconductor equipment spending is expected to grow 26.7 percent to $2.5 billion in 1998, compared to $1.9 billion in 1997.
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