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To: Elroy Jetson who wrote (18033)	6/11/1998 9:57:00 PM
From: Lucas Wan	Respond to of 25960

Bottom ? Bottom ? where ? There isn't one !

To: Elroy Jetson who wrote (18033)	6/12/1998 7:54:00 AM
From: BillyG	Read Replies (1) \| Respond to of 25960

Semi capital spending to fall 20% in '98, except for DUV, which will grow.......... pubs.cmpnet.com Capital spending to fall 20% in '98 MOUNTAIN VIEW, Calif. -- Worldwide spending on capital equipment will decline this year by 20% to 22%, according to a report issued here today by Morgan Stanley Dean Witter. This is a steeper drop than the 12% to 14% rate the investment banking firm earlier predicted. This will pull down the industry, and the company is now predicting that the equipment segment will decline by up to 20% this year, down from an earlier prediction of 5% to 10%. "The second half of the year is going to be worse than we expected," noted Jay Deahna, author of the report. And that trend is likely to continue into next year as well, as he sees no substantial need for capacity until mid-1999. The key factors in the lower estimate are lower semiconductor bookings and overcapacity in the chip industry. Since November, bookings have dropped 34%. While Deahna said the book-to-bill ratio may be heading upwards, the overall indications suggest another difficult year for equipment companies as the chip industry is only now beginning to recover from a disastrous first quarter. Underutilization of chip production capacity is an important sign that equipment sales will remain down for the foreseeable future. Some statistics that underscore this point include dramatic drops in utilization in Taiwan's largest fabs. Taiwan Semiconductor Manufacturing Corp. reported full usage early this year, but that was down to 80% in April and only 70% in May. Rival United Microelectronics Corp. was even lower, said Deahna, even though the foundry was using DRAM as a line filler. Japan remains a wild-card element in the semiconductor sector, with its continuing sluggish economy and lower chip sales throughout the rest of the Asia-Pacific region that is still recovering from last year's economic crisis. Major Japanese chip firms have almost uniformly reduced their capital spending budgets, and the weak yen is hampering further Japanese recovery. Chip companies are expected to begin increasing their capacity investments next year, and Morgan Stanley is predicting that both capital expenditures and the equipment industry will expand by 5% in 1999. One bright spot in the equipment market is deep-UV lithography, which Deahna said will grow in real dollars and as a percentage of the market The cutting-edge technology will increase in popularity, and see growth even in a year when the overall industry is sinking by 20%, a sign of its strength. "The bottom line is that we expected both revenues and utilization to pick up steam in the second quarter, and that did not materialize," said Deahna.