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| Chip Sales Surge On Strong Demand For Communications Equipment, Consumer Electronics and PCs while Chip Equipment Shipments Decrease Slightly |
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Ed Wijaranakula, Ph.D.
Director of Market Analysis, Infotix
Systems, Inc. - November 9, 1999
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On October 21, the North American Semiconductor Equipment Industry (SEMI) posted the September, three-month average for worldwide chip equipment shipments of $1.37 billion, up
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62.1 percent from the same period last year. The September figures represent a slight decline in both equipment shipments, 2.85 percent, compared to the revised August figures, and the book-to- bill ratio, from 1.09 to 1.08, the seventh straight month decline since it peaked in March.
Based upon our estimation, the 1999 year-to-date semiconductor equipment shipments now stands at $10.44 billion, down 6.9 percent from the same period last year of $11.21 billion.
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From the fact that the year-to-year revenue growth for the third quarter ending September 1999 reported by KLA Tencor and Novellus Systems, 33 and 45.2 percent, respectively, is far below the industrial growth rate of 62.1 percent reported by SEMI, we hypothesize that the high observed growth in chip equipment sales could be driven by Applied Materials which will report its earnings on November 17.
As reported by the Semiconductor Industry Association (SIA), global September semiconductor sales surged to a new all-time high of $12.7 billion on strong demand for communications equipment, consumer electronics and PCs. The September data beats the previous record high of $12.12 billion set in December 1997. The upbeat sales figure prompted SIA to raise the 1999 growth forecast to 15 from 12.1 percent, announced last June. According to Mr. Brian Hall, chairman, president and CEO of National Semiconductor Corporation, who presented the new forecast at the the SIA meeting last month, "Demand for semiconductors will surge due to the proliferation of wired and wireless information appliances as well as Internet infrastructure products."
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Our
calculation, using 12-month cumulative global semiconductor
sales from August 1998 to September 1999 of $136.58 billion,
and that from August 1997 to September 1998 of $128.22
billion, shows that 12-month global semiconductor sales
growth is 6.52%, less than one half of the SIA forecast.
Assuming that the SIA forecast is correct, we are expecting
month-over-month record sales for the rest of the year.
Our
analysis indicates that the percentage of semiconductor
equipment shipments, based on global semiconductor sales,
continues to slow down despite strong chip sales. Chip
makers may rely on overseas semiconductor foundry services
and delay plans for expansion. The percentage of chip
equipment sales may rise in the next six months as chip
foundry companies pursue their expansion plans and chip
makers aggressively convert their processes (< 0.2
micron) to 0.18-micron technology. From our opinion, a
conversion to a 0.18-micron process should not drive demand
for silicon wafers since the yield of the 0.18-micron
process is 30 percent or higher than if produced using older
technology.
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About the Author: Dr. Ed Wijaranakula is presently the Director of Market
Analysis at Infotix Systems, Inc. Prior to Infotix Systems, he has worked with
Intel, Hewlett-Packard, Micron, Motorola and Texas Instruments and has held senior as well
as managerial positions in semiconductor manufacturing companies. He has published over 80
technical papers and holds 12 U.S. and foreign patents.
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