A WaferNews Staff Report
It’s widely acknowledged that 2002 will be essentially flat for the equipment industry, with real recovery later in the second half. But, those in the field are already seeing some early signs of life.
“Some customers are asking for tools quickly. That’s a good sign. Business may be turning,” said Steven Lindsay, VP of corporate marketing, LAM Research, Fremont, CA.
Varian Semiconductor Equipment Associates Inc. (VSEA), Gloucester, MA, has had similar queries on how quickly orders could be filled (should they be made), according to President and COO Ernest Godshalk, who’s seen other early signs, as well.
“Some of the tangible things like demo activity have been picking up. Our training backlog has been pushed out as customers have started training more people, and we’ve seen a few pop-up orders,” said Godshalk. “This is hardly a recovery in terms of orders, but there’s definitely been a reawakening.”
There have been increased discussions with customers – some initiated by VSEA, some by the customers – on ways to get guaranteed lead times, including the idea that a deposit of sorts would be put down on equipment to ensure a quicker delivery after an order is placed.
Lindsay expects this to be an up quarter for Lam, but it is too early to know what will happen the rest of this year, although his sense is that there will be a continued pick up in tool orders. He sees demand rising at logic foundries and flash memory makers, with cell phone inventories depleted. There is also action in China, although this is still a small part of the world market. The market is still being led by Asia – Taiwan, Korea, Singapore, and now China – but Japan’s outlook remains bleak, Lindsay reported.
Godshalk agreed that that DRAM and flash are both showing initial signs of recovery, and VSEA is hearing from manufacturers of both. Geographically, however, most of the activity VSEA is seeing is in the US and Korea. Japan, again, is showing the least signs of life while Taiwan and Europe are somewhere in the middle, according to Godshalk.
Lindsay said the majority of buys that Lam is seeing are for upgrades to 0.13-micron and 0.10-micron, except in China, but the Chinese fabs are buying new equipment, rather than used, at present.
Still, Lindsay believes 2002 will be a down year for equipment, compared to 2001. There are only seven fabs buying 300mm equipment, Lindsay added, and he expects this to be 35 to 38% of Lam’s business this year, compared to 25 to 27% in 2001.
Godshalk said VSEA’s seen some increase in capacity buys – particularly for 200mm.
As far as the rest of the year, “That’s the $64,000 question,” said Godshalk.
“If I go out on a long limb, I think what we’re going to see is an increase in capacity buys and technology buys. Clearly customers are interested in advanced technology for ultra-shallow junctions. Customers are also interested in capacity buys at 200mm for newer tools and 200mm for older tools, as well.”
In addition to signs of life from equipment makers on the front lines, some hints of activity from Asia may signal the recovery slated for late 2002.
Air shipments from Japan to Asia increased 2.1% in January compared to January of 2001, the first year-on-year increase in 14 months, according to Japan’s Air Freight Association, apparently largely driven by electronics plants in Taiwan and China stepping up production for the US PC market. Some 70% of these air shipments are semiconductors and related electronic goods. Shipments to China were up 37%, to Taiwan 16%. A source from the trade group told the Nihon Keizai Shimbun that he was even starting to see some contracts to ship semiconductor production equipment, which has not moved at all for some time.
There’s action at Taiwan’s assembly and test houses as well, where sales were up in January, not just over December, but over January of 2001 – the first year-on-year increase since last March. Sales at Siliconware Precision Industries (SPIL) increased 6% in January year-on-year. Sales at the parent ASE were up 1% from a year ago, though total ASE group sales, including its testing business, were still lower than last year’s levels.
The companies saw increased demand from foundry customers TSMC and UMC, especially for higher priced fine pitch packages. SPIL’s packaging plants are currently running at 70 to 75% capacity, its test facilities at 60 to 65%, but its capacity for high-end, high pin count BGAs is in close to full use, and the company has started to buy wire bonders again. This quarter it is raising $180 million from a convertible bond issue and is likely to continue investing more aggressively, according to Deutsche Securities Analyst Yasuo Nakane at Nikkei Microdevices Online.
(By WaferNews editors Bob Haavind, Matt Wickenheiser and Paula Doe)