CHIP EQUIPMENT COMPANIES FACE POSITIVE GROWTH FOR 2000 AND 2001 MORGAN STANLEY ANALYST SAYS GROWTH COULD AVERAGE 17 PERCENT OVER NEXT TWO Years
10/1/99 3:28:32 PM
SAN JOSE, Calif., Oct 1, 1999 /PRNewswire via COMTEX/ -- After
suffering a steep downturn in 1998, the chip equipment industry is
staging a sustained recovery and period of growth that should continue
through the rest of the year and into the first years of the next
century.
All of this optimism is in large part due to the explosive growth of
the Internet and the rush to connect various computer systems and
networks, plus the growth in wireless communications and use of
sophisticated electronic devices.
The outlook was the highlight of the 26th annual dinner and awards
ceremony held last night at the Fairmont Hotel, an event which featured
more than 600 industry executives and their guests.
The evening was sponsored by Silicon Valley-based trade group
Semiconductor Equipment and Materials International (SEMI). SEMI
represents the companies that build and sell the equipment used to make
semiconductors and related components.
Valley technology pioneer Wilfred Corrigan, chairman and chief
executive officer of LSI Logic, which pioneered the "system-on-a-chip"
concept, was the keynote speaker at the dinner.
He, too, was positive about both the chip and chip equipment
industries.
"We are completing the first year of recovery for the global
semiconductor industry," said Corrigan. "In all likelihood, the years
2000 and 2001 will be double-digit ones for the industry, quite
possibly more than 20 percent in each year."
The after-dinner presentations included forecasts from analyst Jay
Deahna, vice president at investment house Morgan Stanley, as well as
colleagues Mark Edelstone, senior semiconductor analyst, and John
Marren, managing director and co-head of West Coast Technology Finance.
"The key theme in the global semiconductor industry is rising prices,
which is occurring from DRAMs to raw wafers to equipment," said Deahna.
"Consequently, we believe the entire semiconductor food chain will
exhibit margin expansions in upcoming quarters that should give
positive earnings surprises and rising earnings estimates."
Deahna predicted 17 percent growth for the chip equipment industry over
the next two years, a percentage which could rise substantially
depending on a number of variables.
He discounted any long-term negative fallout from the September Taiwan
earthquake, which temporarily knocked out several major plants that
make chips for worldwide use.
Deahna noted that quake's impact would be negligible on local chip
"fab" plans, and said that the stock market overreacted when
semiconductor stocks were among the first groups to fall after the
tremor hit the island three weeks ago.
"Taiwan is in a recovery mode now that the power has been restored, and
we expect minimal disruptions to third quarter bookings, revenue and
earnings results for equipment suppliers," said Deahna. He said capital
spending for 2000 could rise to $42 billion next year, a 27 percent
increase over current spending for new equipment."
The huge sums are in large part attributed to changes in the chip
industry, ranging from new materials to new processes that include
copper and smaller circuit sizes on the tiny chips.
"We'll see more changes in the next 10 years than there were in all of
the last 40," he said.
Edelstone offered a similar positive forecast for the semiconductor
industry, which drives demand in the chip equipment arena. He said the
chip industry could explode as much as 25 percent in 2000 and 2001. "We
are completing the first year of what will be a couple of years of
accelerated growth."
Marren predicted that a period of merger and acquisition activity in
the months ahead as chip and chip equipment companies fight for larger
market share and to handle future growth.
Earlier in the day at a pre-dinner news briefing, SEMI president
Stanley T. Myers noted that the SEMIndex, which tracks and indexes the
share prices of 66 member companies, had jumped substantially since it
was first unveiled in the first quarter of the year. The index was set
at 100 on January 4 -- the first trading day of 1999 -- and reached
186.75 on Sept. 30, the last day of the third quarter.
"The foundation of the infrastructure is strong," said Myers. "We
appear to be well on our way to recovery, despite a bit of a slowdown
over the summer months."
The global trade group also honored Mihir Parikh, Ph.D., chairman &
chief executive officer of Asyst Technologies, Inc. and Anthony C.
Bonora, chief technology officer of the company, for their pioneering
work and contributions to chip equipment technology.
About Semi Based in Mountain View, SEMI is an international trade
association serving more than 2,300 companies participating in the $65
billion semiconductor and flat panel display equipment and materials
markets. SEMI maintains offices in Austin, Beijing, Boston, Brussels,
Hsinchu, Moscow, Seoul, Singapore, Tokyo and Washington, D.C. Visit
SEMI Online at www.semi.org.
SOURCE Semiconductor Equipment and Materials International
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