Semiconductor equipment markets to stage gradual recovery

San Jose, CA – The recovery in the semiconductor market will be gradual; technology innovation continues unabated; and China is expected to play an increasingly important supply and demand role. These views were expressed by senior executives who participated in a panel discussion during a manufacturing segment of SEMICON West 2002, which opened July 17 at the San Jose Convention Center.

Panel members were Michael Bradley, president, semiconductor test division, Teradyne Inc.; Nicholas Konidaris, president and CEO, Advantest America Inc; Alexander Oscilowski, president, Kulicke & Soffa Industries Inc.; and Arthur Zafiropoulo, chairman and CEO, Ultratech Stepper Inc.

On the timing and strength of the industry upturn, panel participants agreed that the recovery was underway and would gain momentum through 2003. However, the return to strong growth this time would be slower compared with earlier upturns in the industry.

Konidaris said the absence of new end-market applications this year would contribute to the slower pace of the upturn. “It will be a recovery driven by replacement applications rather than new, novel applications,” he said.

Although sales of assembly and packaging equipment are expected to decline by 23% this year, according to SEMI’s mid-year consensus forecast, some equipment suppliers have reported strong orders for products used in leading edge applications. Oscilowski noted that customers were buying for technology needs rather than buying for capacity requirements. “The technology treadmill in this industry continues,” he said.

Panel members were bullish on the long-term outlook for the semiconductor market in China. Zafiropoulo predicted that China would become the No. 2 market (behind the US) for semiconductor equipment by the end of this decade.

However, short-term concerns included the potential for stricter US-imposed export controls on advanced process tools going into China, and an imbalance in supply and demand from new wafer fabrication investments on the mainland.

Bradley noted that there was an acceleration of assembly, packaging, and test investments in China, providing more opportunity for the suppliers of final manufacturing equipment. “Those of us that support the contract assembly and test business have been moving into China faster,” he said.


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