Chip manufacturers post bumper year in 2000

Chip manufacturers have had one of their best years on record, with semiconductor equipment revenues up 85% and integrated circuit sales up 40% over 1999.

          Chip manufacturers have had one of their best years on record, with semiconductor equipment revenues up 85% and integrated circuit (IC) sales up 40% over 1999, according to the industry organisation Semiconductor Equipment Materials International (SEMI).

          The figures were published in a report released Monday by SEMI covering its Industry Strategic Symposium (ISS) in Hsinchu, Taiwan.

          But the industry is in for a hard landing next year, with just 19% growth for IC sales and about 10% growth for chip equipment, analyst VLSI Research Inc. said in the report.

          Slower consumer spending, an inventory build-up and looming overcapacity in chip fabrication will mean a slowdown in 2001, industry executives said at the conference, according to SEMI's report.

          The first quarter of 2001 will set the trend for the year, analyst Bill McClean of IC Insights said in the report.

          "Q1 for 2001 looks difficult. The IC industry has always found it very difficult to achieve a soft landing," SEMI quoted him as saying.

          That said, it's unclear how long the expected slowdown will last. McClean said it may be a "digestion period" rather than a full-scale downturn, SEMI reported. "By late 2002, the IC industry could be rolling again."

          Longer term, participants at ISS Taiwan 2000 agreed that the chip industry has a bright future.

          Asia, including Taiwan, will be a key part of that success. By 2004 Asia-Pacific (excluding Japan) will surpass North America to become the world's largest IC consuming market, according to IC Insights. In terms of IC production, Taiwan's chip output in 2000 is expected to rise 61% to $US21.7 billion, according to Genda Hu, president of the Taiwan Semiconductor Industry Association.

          Next year, worldwide semiconductor industry sales will reach $249 billion, according to the Semiconductor Industry Association.

          SEMI can be found online at http://www.semi.org/.

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