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

To: Return to Sender who wrote (10665)	7/20/2003 8:05:02 AM
From: Snowman	Respond to of 95478

Chip Makers Gird for Rise In Semiconductor Demand By DON CLARK Staff Reporter of THE WALL STREET JOURNAL Throughout a three-year slump, semiconductor makers have invested in technology to make their products more powerful. So have makers of the esoteric manufacturing tools used in chip factories. But orders for tools slowed to a trickle. Chip companies bought enough equipment to refine new manufacturing processes, but have held back from major purchases to prepare their factories for high-volume production. "Our customers are really quite cautious about adding capacity," says Michael Splinter, chief executive officer of Applied Materials Inc., the largest maker of chip-manufacturing tools. That caution could soon end. As the toolmakers gather for an annual U.S. trade show, dubbed Semicon West, industry executives point to signs of improved chip demand and are readying new tools and production techniques to exploit any resulting shopping spree. One piece of evidence: Factories are filling up, hastening the day that manufacturers will increase capacity to meet demand. Taiwan Semiconductor Manufacturing Co., a foundry that makes chips for other companies, last week said its factories operated at 86% of capacity in the second quarter, up from 67% in the first quarter. Market-research firm Gartner Inc. puts plant utilization at 81% for the entire industry, compared with 59% in mid-2001. Gartner last week predicted that world-wide capital spending by semiconductor makers, though off slightly in the second quarter, will rebound to grow 8% to $29.9 billion in 2003 -- after a 38% drop in 2002 -- and jump 37% next year. "If the utilization at foundries keeps inching forward, and other major companies keep on their expansion plans, this thing could start coming back," says Jeffrey Benzing, an executive vice president at Novellus Systems Inc., a toolmaker in San Jose, Calif. One spender is Samsung Electronics Co. The big South Korean company plans to sink $4.3 billion into semiconductor plant and equipment this year, up nearly 39% from the $3.1 billion it spent in 2002. That is more than even market leader Intel Corp., though Samsung's figures include $800 million for computer displays rather than on chips alone. Intel, after a multiyear investment binge, plans to spend between $3.5 billion and $3.9 billion in 2003, down as much as 25% from last year.