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To: MulhollandDrive who wrote (47604)	7/20/2000 11:18:41 AM
From: blake_paterson	Respond to of 93625

Hang on--Asia's back in drive seat of chip equipment spending By J. Robert Lineback Semiconductor Business News (07/20/00, 09:22:49 AM EDT) SAN JOSE -- A couple of years after tanking in a financial meltdown, Asia is fueling the chip industry's comeback in capital spending, with investments in production tools expected to more than double in the region to $18.77 billion by 2002 compared to $9.29 billion in 1999, says the latest forecast from the Semiconductor Equipment and Materials International (SEMI) trade group here. A breakdown of SEMI's mid-year consensus forecast shows Taiwan and South Korea outpacing other regions in chip-equipment spending growth during the next three years (see table below). The rest-of-world (ROW) segment, which is nearly entirely made up of other Asian countries, will also surge in semiconductor capital spending between 1999 to 2002, paced by China. San Jose-based SEMI released its mid-year forecast last week, during the Semicon West trade show in San Francisco. The overall forecast calls for worldwide semiconductor equipment sales to grow 37% in 2000, reaching $34.5 billion from $25.5 billion last year. Equipment investments are then expected to rise another 23% to $43 billion in 2001, based on the mid-year forecast, which is now relatively conservative compared to revised outlooks by market researchers that place growth at as high as 70% this year. With a number of large Asian chip companies attempting to take leadership in pure-play foundry services and DRAMs, the buildup in the region could become a key factor in setting the stage for the next slowdown in semiconductor growth, suggest industry analysts. Many market observers have pulled up their forecasts for the next slowdown to 2002 instead of 2003 because of accelerating investments that could flood the market with too many DRAMs and other ICs (see July 6 story). SEMI said Taiwan chip-making operations plunked down $4.52 billion for semiconductor equipment in 1999, an increase of 39.9% from $3.23 billion in 1998, and the group's forecast predicts the island country will increase spending on chip gear by another 37.6% to $6.27 billion. By 2002, Taiwan's semiconductor equipment market will reach $9.0 billion, based on the consensus of 60 member companies of SEMI. Korea's growth is by far the strongest, with fewer players in the country compared to Taiwan and other regions. SEMI's forecast shows South Korean chip operations--dominated by Samsung Electronics Co. Ltd. and Hyundai Electronics Industries Co. Ltd.--will spend $2.79 billion on semiconductor equipment in 2000, an increase of 41% from last year's $1.98 billion, and then increase spending to $4.21 billion by 2002. (In 1999, Korean chip makers increase capital spending 60% from a depressed $1.24 billion in 1998). For the entire Asian region (excluding Japan), semiconductor capital spending is expected to grow 38.8% to $12.89 billion in 2000 from $9.29 billion in 1999, according to the SEMI forecast. The region will then increase spending chip production tools by 32.7% to $16.31 billion, and then another 15.1% to $18.77 in 2002, when it appears semiconductor equipment growth will cool down worldwide. In contrast, North America's semiconductor capital spending is now expected to grow 35.2% to $10.07 billion in 2000 after dropping 0.5% to $7.45 billion in 1999, SEMI said. North American equipment sales are expected to growth 21.8% to $12.26 billion in 2001 and then increase 9.7% to $13.45 billion in 2002, according to the mid-year forecast.