February 3, 2004 – A new report from market research firm Strategic Marketing Associates anoints Japan as the new king of semiconductor-equipment capital spending.

Japan’s projected capex in 2004 will be approximately $10 billion, 47% more than it spent in 2003, which was a 31% increase from 2002 levels. US chipmakers, the top spenders for capital equipment since 1995, reduced their capex by 12% in 2003, and SMA predicts they’ll only raise their budgets by 6% in 2004, giving them a 23% overall market share, down from 30% a year ago.

Big capex increases for 2004 also are predicted for the Asia-Pacific region, particularly in Malaysia (201%), Singapore (169%), and Taiwan (82%). Combined, the Asia-Pacific region will spend the most on chipmaking gear in 2004 with a total of $19.1 billion. SMA projects total global equipment capex to be $42.9 billion, a 39% increase from 2003.

What’s spurring the comeback? Japanese chipmakers poured large investments into DRAM facilities in the early 1990s, but gradually withdrew from the market and tightened purse strings after losing share to companies in Korea and Taiwan — by 2002 Japan only accounted for 20% of overall capital spending, according to SMA. Now Japan is focusing on new markets such as microprocessors and integrated system chips for consumer devices, and is aggressively funding projects including new 300mm facilities.

“Japanese companies…are back and have their sights set on increased market share and the leading-edge capacity to achieve it,” said SMA president George Burns. “The rest of the world had better sit up and take notice.”