<<I suppose my question is whether there is likely to be enough market demand in Europe and North America to warrant increases in Asian capital investment in semi-equipment. >>
If you will forgive me for answering this, the answer is largely yes, but it's not the most important question. The biggest problem is that, in Korea for example, they don't have any money (Samsung down 8% last night) and nobody will lend them any. Even if the Japanese banks wanted to lend them money, the huge scrutiny on their banking system and Japan's own problems aren't going to allow for it.
Most of these companies now have a negative book value. With the Pacific bubble bursting, the only value they have -- future earnings -- is gone.
It doesn't matter how smart it is for them to invest in semi equipment. They can't do it. Their countrymen are screaming for jobs (and in a few cases, food), they are defaulting on their debt, they are heavily leveraged and hemorrhaging money. This is the problem with those heady 200% debt-to-equity ratios -- when it's good, you make a ton, but when it's bad, there's no equity to fall back on.
I'm really guessing that the Koreans (again, for example) are either going to face elimination from the semiconductor market or sale of equity to Western firms. Either way, the recovery in the semi-equipment sector is going to be driven by dollars, not yen. And it will be awesome when it comes. |
