SEMI hikes chip gear forecast amidst growing optimism at Semicon West

SAN FRANCISCO -- Optimism is flowing here at Semicon West, the world's largest trade show for semiconductor production equipment, materials and software. With chip makers scrambling to expand their plants worldwide, organizers of the annual event released a revised outlook for semiconductor capital spending to what is now a conservative 36% growth forecast for 2000, but more than double the projection at the start of this year.

A mid-year poll conducted by Semiconductor Equipment and Materials International (SEMI) shows growth in production tool sales expected to reach $34.5 billion in 2000, followed by a 23% increase to $43.0 billion in 2001. In 1999, semiconductor equipment sales were stronger than originally forecast, coming in at $25.5 billion, an increase of 18.4% from the depressed market conditions in 1998, when worldwide revenues were only $21.5 billion, said SEMI.

The release of a more bullish mid-year SEMI Consensus Forecast comes at a time when industry analysts are also hiking their projections for capital equipment spending to as much as 70% over 1999 (see July 6 story). While this year is much stronger than anyone originally expected, some market observers are now predicting the likelihood of a slump in chip markets during 2002, partly because of overspending on new production capacity.

But semiconductor capital equipment vendors are not being bothered by the prospects of slower growth in several years, and many are expanding their offerings for the next-generation 300-mm fabs. Applied Materials Inc., for example, rolled out 21 new tools for 300-mm wafer processing at the show on Monday (see July 10 story).

"The promise of a major ramp-up in semiconductor manufacturing in 2000 is being realized, which is in turn fueling demand for added capacity," said Stanley Myers, president and CEO of the SEMI trade group, which hosts the Semicon West event in San Francisco and San Jose this week. "New manufacturing technologies, including the much-anticipated transition to 300-mm wafers and the introduction of 0.15- and 0.13-micron chip designs, are also giving a boost to the current upturn."

By product category, SEMI's mid-year Consensus Forecast shows sales of wafer process equipment rising almost 40% to $23.5 billion in 2000 from $16.8 billion in 1999. Sales of assembly and packaging equipment are expected to increase to $2.4 billion, up 21.5% from $2.0 billion in sales in 1999. Test equipment sales should reach $7.0 billion in 2000, up 35.5% from the $5.2 billion sold in 1999, according to the San Jose-based trade group.