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To: TREND1 who wrote (29466)	3/5/1998 11:01:00 AM
From: DJBEINO	Respond to of 53903

ANALYSIS - JAPANESE EQUIPMENT CHIP-MAKERS FACE BLEAK YEAR TOKYO, March 5 Asia Pulse - Suppliers of manufacturing equipment and materials to the semiconductor industry expect a hard year in fiscal 1998, according to a survey conducted by The Nihon Keizai Shimbun in March. Demand from semiconductor manufacturers in both Japan and South Korea should fall significantly, owing to tough operating conditions. Japanese chip makers are cutting back on capital investment, owing to weaker DRAM prices, while South Korean firms are cancelling orders or requesting shipment delays because of the mess their domestic economy is in. Sentiment is deteriorating quickly, as illustrated by a comparison with the same survey conducted in December. Makers of chip manufacturing equipment lowered their 1998 forecasts of total yen-denominated stepper sales by 13%. Industry leader Nikon Corp., which cut its fiscal 1997 stepper shipment forecast to 450 machines, from 500, expects a further 10% year-on-year drop in fiscal 1998. Canon Inc. has not revised its own forecast lower yet, but has said it expects the global stepper market to contract 10% in the fiscal year from April. Prices for 64M DRAMs are declining in a similar fashion to those of their 16M predecessors. Chipmakers have thus stopped making fresh investments in facilities to manufacture 0.25 micro meter third-generation chips. Slower demand for excimer steppers has been the inevitable result. Lower stepper shipments in fiscal 1997 at Nikon are mostly blamed on falling demand for excimer models. The outlook for IC wire bonders is not very promising either. The one cause for hope is that South Korean chip exports may eventually recover, because the country's currency is so weak. The lower won is having a negative effect at the moment by making materials prices higher. However, Korean companies may later enjoy the benefits of a weaker currency if they become more price-competitive overseas. But perhaps this is just wishful thinking. Indeed, companies who look to semiconductor manufacturers for business are not expected to enjoy the buoyant conditions of the past two years. Of 10 major devices and materials, only logic testers and mixed signal testers are expected to exhibit higher annual growth in shipments in 1998 than they average over the nine years from 1990 through 1998. Logic tester sales should rise 24% in 1998, compared with a nine-year average of 4.7%; mixed signal tester sales will increase 14%, compared with an average of 11.3%. Even if chip prices climb in the first half of fiscal 1998, it will still be some time before the increase is reflected in the performance of semiconductor manufacturing device makers. In short, the industry should expect a rough ride, at least through the end of the coming fiscal year.