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Technology Stocks : Applied Materials No-Politics Thread (AMAT) -- Ignore unavailable to you. Want to Upgrade?

To: Dale Knipschield who wrote (7446)	10/8/2003 8:07:34 AM
From: Proud_Infidel	Read Replies (1) \| Respond to of 25522

Chip plants used 90 pct of capacity in Sept-survey Wednesday October 8, 6:30 am ET AMSTERDAM, Oct 8 (Reuters) - Chip producers used 90 percent of their production capacity in September in most regions of the world, which should set off much-delayed investments in new machinery, a survey found on Wednesday. "What is amazing about this data is how uniformly high (capacity utilisation) is, yet the industry is pretty nonchalant about expanding (production capacity) at this point," analyst Dan Hutcheson at chip research group VLSI said in a statement. Choose one Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Click for more! He warned of an imminent capacity crunch because chip sales are increasing by some 10 percent this year. Total chip unit production is almost back at the peak levels of 2000. Capacity utilisation in September is estimated by VLSI at an average 90 percent in Japan, the United States and Europe, 89 percent in Korea and a hefty 92 percent in Taiwan where most of the big contract manufacturers are based. Those utilisation rates compare with actual August levels of between 86 and 88 percent in most regions of the world. Utilisation levels greater than 90 percent normally trigger investments in new machinery, which should benefit lithography makers such as ASML (Amsterdam:ASML.AS - News), Canon (Tokyo:7751.T - News) and Nikon (Tokyo:7731.T - News), as well as other equipment companies such as Applied Materials (NasdaqNM:AMAT - News). But these orders have not come through so far. "It takes equipment to make real capacity and this is not happening," Hutcheson said. ASML, the world's largest chip lithography machines maker, is due to publish third-quarter figures next week and analysts expect weak results. Chip makers are cautious about investments now because they want to publish fat profit margins after two of the industry's worst ever years. High factory utilisation rates and high chip prices due to short supply will lead to bigger profits. But VLSI warned the waiting would eventually make things worse, raising the prices of equipment and chips, leading to another bubble. "This is how our industry's crazy cycles are driven. It's not that they cannot be predicted, it's that we are driven to repeat them. Here we go again," Hutcheson said.