April 30, 2003 – Santa Cruz, CA – Quarterly data from Strategic Marketing Associates (SMA) shows that 90nm technology is becoming the next sweet spot in the market for equipment spending. And, while fab construction has been in a slowdown, there has been tremendous growth in fab construction spending in China.

SMA data indicates that spending for new equipment will rise slowly until 4Q03 when it is expected that double-digit growth will return to the industry. The projected growth is due to an increase in the number of 90nm capable fabs in production. The number is expected to rise from four in the first quarter of this year to almost 50 by mid-2004. SMA also estimates that during this time spending for 300mm equipment will double, helped along by 15 new 300mm fabs coming on-line by mid 2004.

The forecast for fab construction, however, shows a decline of 2% for the year, according to SMA. But as more 300mm fabs start construction, spending will begin to grow by 4Q03 and by early next year reach its highest level since 2001. Approximately nine new 300mm fabs will start construction between now and the second quarter of 2004.

Part of the increase in fab construction spending is also due to the growing presence of China as a major force in the foundry business. There are more new fabs under construction in China and more construction spending there than any other region of the world, according to SMA data.

“China is now growing as fast as Korea or Taiwan did during their growth periods,” said George Burns, president of SMA, a market research firm specializing in foundry information. “The country’s share of equipment spending, for example, will grow from 11% of the total in the first quarter of this year to 15 percent by 2Q04. There’s positive news in these forecasts. In this still uncertain time, we can see the beginnings of the turnaround. When, not if, overall chip sales begin to increase, along with an improving economy, we’ll see an even healthier forecast next quarter.”