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Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Return to Sender who wrote (10081)	6/11/2003 7:31:10 PM
From: SemiBull	Read Replies (2) \| Respond to of 95531

Chip firms' capex to rise 13% in 2003, says survey By Peter Clarke, Semiconductor Business News June 10, 2003 (3:47 p.m. EST) URL: eetimes.com SANTA CRUZ, Calif. — A survey of semiconductor industry capital spending plans points to a worldwide total for 2003 of $31.6 billion, up $3.6 billion, or about 13 percent, from $28 billion in 2002. The spending is set to increase in Europe, Japan and the Asia-Pacific region but not in United States where a spending decline is set to continue. The result is likely to be a neat 40, 30, 20, 10 split of capital expenditure in 2003 between Asia-Pacific, the Americas, Japan and Europe, respectively. The survey was conducted by Strategic Marketing Associates (SMA), a market research company specializing in fab information. In May, SMA said it expected overall capital spending to increase to $31 billion during 2003, which it said was up 16 percent on 2002 (see May 5 story). According to SMA, the market moved from an all-time high of $61 billion in 2000 to its low in 2002, when capital spending declined by 55 percent or $33 billion. In 2002 and 2003 U.S. chip companies cut spending by nearly $8 billion. That represents 70 percent of all cutbacks in the industry during this period. As a result, U.S. companies' share of worldwide capital spending has fallen to 30 percent, its lowest level since 1992, SMA said. In contrast, Asia Pacific companies are due to increase their spending by $3.4 billion this year and outspend every other region. Their share of the industry's capital spending should account for more than 40 percent of all capital spending, SMA predicted. Japan and Europe round out the remainder of the spending with 20 percent and 10 percent, respectively. “We're bullish on chip capital spending this year if the economy doesn't sputter or stall,” George Burns, SMA president, said in a statement. “Last year the ratio of capital spending to chip sales was the lowest it has been in 20 years. This suggests the industry has cut spending too much, is under-invested and therefore needs to increase spending to support projected increases in sales and the move to advanced technologies.” The survey concludes that while some companies are still cutting spending this year, increased spending will outweigh the cuts. For example, Intel Corp. is cutting spending but DRAM companies are increasing their spending, as are many integrated device manufacturers (IDMs). Additionally, three leading foundries, Taiwan Semiconductor Manufacturing Corp., United Microelectronics Corp. and Chartered are cutting spending. This is balanced by the increase in spending by challengers in China and elsewhere. It is also expected that Japanese companies will increase spending this year by as much as 25 percent. While equipment vendors and fab builders have weathered the downturn, their customer base has changed significantly. A diverse group of IDMs, which formerly accounted for most of their business, has shrunk permanently and U.S. companies have lost their supremacy as the biggest market for capital goods. The survey suggested that because many IDMs have committed to outsourcing, equipment vendors and fab builders will find that revenue streams from these IDMs will slow. The biggest spenders and builders will be in Asia Pacific as most of the foundries are now located there.