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

To: StanX Long who wrote (13147)	1/28/2004 11:45:23 PM
From: StanX Long	Read Replies (1) \| Respond to of 95737

Capital spending to jump 41% in '04, says report By Mark LaPedus Silicon Strategies 01/28/2004, 1:30 PM ET SANTA CRUZ, Calif.--New fabs coming online this year, coupled with the continued ramp of existing plants, will drive capital spending up by 41 percent this year to $43 billion, according to a new report from Strategic Marketing Associates (SMA). Most of the fab action involves 300-mm plants. And at the same time, Japan is taking the lead over the United States in the capital spending race, according to the report from the market research firm. "The industry recovery is continuing to gain momentum with stronger chip sales and high capacity utilization," says George Burns, president of SMA, in a statement. "But the surprise is that equipment sales have been in a rut with relatively little growth. This is changing. We expect equipment sales to go through the roof this year," he said. The value of new fabs starting construction reached $21 billion in 2003 and SMA expects it to climb even higher in 2004. The report lists 40 upgrades or new fab projects that are likely to start construction in the next four quarters. In addition, 17 new fabs are expected to come online in the next four quarters, according to the Santa Cruz-based market research firm. Most new fab construction will be 300-mm as DRAM fabs continue to migrate to the larger substrate size. Japanese companies, currently account for only 11 percent of 300-mm capacity . But they are taking a leadership position in building smaller, more affordable 300-mm fabs for products other than DRAMs. Burns expects as many as five Japanese companies to build new 300-mm fabs this year. U.S. chip companies will increase their spending by 6 percent to $9.9 billion. Last year, U.S. chip companies accounted for 30 percent of the industry's capital spending. This year it will account for only 23 percent, its level ever. "It's outsourcing," Burns said. "Many U.S. companies want someone else to do the heavy investing. That's why Asia Pacific now accounts for more than 40 percent of all capital spending. That's where the foundries are. From now on, Asia Pacific is going to be the leader. Not only in terms of spending, but also where the fabs will be built." Japanese companies will spend more than any other regional grouping of companies. "This is the first time Japanese companies have been in the top spot since 1994," said Burns. Japanese companies will account for 25 percent of all capital spending this year.