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To: Fabeyes who wrote (41169)	12/1/1998 11:39:00 PM
From: Fabeyes	Read Replies (1) \| Respond to of 53903

A service of Semiconductor Business News, CMP Media Inc. Story posted 4 p.m. EST/1 p.m. PST, 12/1/98 Industry managers, analysts see chip-equipment recovery next year TOKYO -- The global semiconductor equipment and materials industry will begin to recover in 1999, but the timing of the recovery could be anywhere from the first quarter of the year to the third quarter, according to more than 100 financial analysts, fund managers, and industry executives who met here prior to the annual Semicon Japan exposition, which begins today. "We are predicting that the semiconductor capital equipment industry will continue to grow even faster than the semiconductor industry, at a compound annual growth rate of 20-25%. This is what has made it such an attractive industry for investors," said Linda Strunk, senior capital equipment analyst for Warburg Dillon Read. "The high rate of growth is a function of the increasing amount of value that equipment manufacturers are providing for semiconductor makers." While participants differed on the quarter in which the recovery will begin, most felt it will occur in 1999. "We see good prospects for the future, with 5-10% capital spending growth in 1999," said Noriko Oki, vice president of Morgan Stanley Japan Ltd. "The outlook for gy-driven equipment buys is much better than capacity-driven buys." Akira Minamikawa, senior analyst for component semiconductor research at IDC Japan, said that in the recovery, PCs will begin to lose their place as the primary driver of semiconductor consumption. Instead, he said, such applications as automobiles, smart cards, communications and digital consumer products will consume ever-larger quantities of ICs. In order to participate in the recovery, Japanese companies will have to develop a more global point of view, according to Tetsuo Tsuneishi, executive vice president of Tokyo Electron Ltd. In particular, he said, they need to expand their presence in the U.S. market. "We must completely change the shape of the industry and the corporations that participate in it," he said. Other speakers at the conference emphasized that the industry will look different when the recovery comes. They cited further consolidation, increasing numbers of technology partnerships, and more selective purchases of advanced equipment to upgrade and extend the life of existing fabs.