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To: Proud_Infidel who wrote (40555)	12/7/2000 9:56:46 AM
From: Proud_Infidel	Respond to of 70976

'Soft landing' for chip-tool suppliers hinges on 300-mm movement Semiconductor Business News (12/07/00 04:54 a.m. PST) TOKYO -- Is this déjà vu all over again, or can the semiconductor equipment industry skirt a market crash by making a "soft landing" from hyper growth in 2000? That's become the $10 billion question in 2001, based on the difference between a new industry consensus forecast released at the Semicon Japan trade show here this week and recently downgraded projections for growth by analysts. The new year-end consensus forecast, issued by the Semiconductor Equipment and Materials International (SEMI) trade group, matches up with most industry estimates that place sales growth for chip tools at more than 80% in 2000. But SEMI's new consensus forecast--based on inputs from 72 companies worldwide--places next year's revenue growth at 22.3%, or a little more than twice the rate of other projections. At issue is whether chip makers have used up their 2001 capital expenditures in 2000, or whether the 300-mm wafer movement is strong enough to carry industry growth during the next several years. "This is the two-for-one deal. We got two years of growth in one," concluded analyst Dan Hutcheson, president of VLSI Research Inc. Speaking before SEMI's Taiwan Industry Strategy Symposium prior to Japanese equipment trade show this week, Hutcheson told Taiwan's chip makers that capital spending will cool off to around 10% in 2001. Last week, San Jose-based analysts with VLSI Research said the outlook now calls for a possible "recession" in the second half of 2001, based on current market conditions (see Dec. 1 story). Some analysts have expressed concern about increased capacity at a time when market growth is softening. Also speaking at the Taiwan executive summit meeting prior to Semicon Japan, chip analyst Bill McClean, president of IC Insights Inc, said the first quarter was always the momentum indicator for the rest of the year. He cautioned that the first quartet of 2001 "looks difficult" and "the IC industry has always found it very difficult to achieve a 'soft landing,' " said the Scottsdale, Ariz.-based analyst. One concern has been a surprising increase in total wafer-processing capacity in 2000, based on recent statistics from the Semiconductor Industry Association. The SIA's third-quarter capacity report shows the potential for a 25% growth in wafer starts this year without a large number of new plants coming on line (see Nov. 30 story). Last week, analyst McClean told SBN that the unexpected surge in third-quarter capacity might be a result of extra work shifts inside wafer fabs, or higher throughput from new tools. But looking ahead, SEMI's member companies are hoping demand for new 300-mm tools and advanced process technologies--such as copper interconnects--will maintain revenue growth at a modest level through 2003. SEMI president and CEO Stanley T. Myers said the new consensus forecast shows confidence remains high among companies following "the best year ever for the semiconductor equipment industry." Taiwan will continue to be the strongest regional market for chip-production systems, based on the consensus forecast, followed by North America, Japan, and Korea (see regional breakout). SEMI outlook by equipment segments Region 1999 2000 2001 2002 2003 North America $7.5 billion $12.2 billion (+63.1%) $14.6 billion (+20.3%) $16.1 billion (+10.4%) $17.3 billion (+6.9%) Europe $3.2 billion $6.2 billion (+91.1%) $7.5 billion (+21.3%) $8.2 billion (+9.9%) $8.7 billion (+5.2%) Japan $5.5 billion $8.9 billion (+60.3%) $10.3 billion (+16.7%) $11.5 billion (+10.9%) $12.1 billion (+5.6%) S. Korea $2.0 billion $4.0 billion (+101.2%) $4.9 billion (+22.8%) $5.4 billion (+10.4%) $5.7 billion (+5.5%) Taiwan $4.5 billion $9.8 billion (+115.9%) $12.4 billion (+27.2%) $14.3 billion (+15.4%) $15.8 billion (+10.1%) Rest of World $2.8 billion $5.8 billion (+108.6%) $7.4 billion (+27.3%) $8.6 billion (+16.5%) $9.7 billion (+12.0%) Total $25.5 billion $46.7 billion (+83.4%) $57.2 billion (+22.3%) $64.2 billion (+12.3%) $69.1 billion (+7.7%) SEMI year-end consensus forecast *Includes China, Singapore, Malaysia and other Asian countries