Europe–Finally Ripe for CC Business?
John Haystead
Editor-in-Chief
It`s true that the past few years have seen sporadic, often lethargic, activity levels in Europe relative to new semiconductor facility construction and investment in new equipment (i.e. contamination control technology). Although sales of semiconductor equipment in Europe rose dramatically in the first quarter of 1994 (from $381 million/Q493 to $500 million in Q194), they later tapered off again to just $418 million by the third quarter.*
It is this inconsistency, or lack of sustained and predictable growth in such a large and important sector of the contamination-control industry, that has contributed to the general lack of enthusiasm, at least by U.S. companies, for a truly aggressive pursuit of the European market. Today, however, a growing number of strong indications may be signaling that this situation is about to change dramatically.
Recent data compiled by Semiconductor Equipment and Materials International (SEMI), using a number of research sources, support this premise. As pointed out by Ed White, Senior Vice President at Lehman Brothers (New York, NY), “semiconductor spending is now beginning to increase meaningfully in Europe and Japan, and we think it will take some time before the companies in these regions have exhausted their appetites for new plants and equipment.” Lehman Brothers predicts that, ultimately, overall worldwide capital equipment purchases will grow 48 percent over 1993 figures to $7 billion for 1994, and of this number, “Western European companies will commit 75 percent more for equipment in 1994 than they did in 1993. (This compares to 41 percent for U.S. companies).”
Nadar Pakdaman, Senior Industry Analyst at Dataquest (San Jose, CA) agrees with this outlook. “The growth in Europe for 1994 has not shown the same levels as in 1993; however this is mostly due to investments in other regions by European and other semiconductor manufacturers.” Noting the current attractive cost of capital in Europe, as well as the extent and capacity of its technical infrastructure, Pakdaman estimates that “in the next several years, Europe will be the focus of major capital investments by local and foreign semiconductor manufacturers.”
Dataquest also notes that despite the economic slowdown, semiconductor manufacturers, especially European and Japanese companies, have nevertheless continued to invest in Europe at respectable levels.
Look to future issues of CleanRooms for information on other important user-industry segments in Europe, Japan, the Pacific Rim and ROW, but right now, it appears that the time is ripe for internationally-minded, contamination-control companies to make sure that their efforts to expand their presence in the European market are not just ready to move, but already moving out aggressively.
*SEMI Executive Summary Report (3rd Quarter 1994). For a copy call (415) 964-5111.