January 13, 2005 – Global sales of Japanese semiconductor and LCD panel-making equipment are likely to surge 48.3% to a record 2.261 trillion yen (US$22 billion) this fiscal year, before contracting mildly in the following two years, the SEAJ said Wednesday, according to Nihon Keizai Shimbun

Better-than-expected sales of chipmaking equipment and strong growth for machines that make LCD panels mean equipment sales for the fiscal year ending March will likely surpass the previous record of Y2.079 trillion set four years ago, according to the Semiconductor Equipment Association of Japan (SEAJ).

SEAJ expects Japanese chipmaking equipment sales for this fiscal year to jump 43.6% on year to Y1.676 trillion, just 7% short of the record sales marked in fiscal 2000.

The sharp increase in sales is likely as Japanese chipmakers are expected to have spent nearly Y1.14 trillion in capital outlays in the year, up more than 30% from the year before, SEAJ said.

For the subsequent two years, SEAJ expects chipmaking equipment sales to fall, but said that period of contraction will be short and “relatively mild.”

For fiscal 2007, SEAJ expects the market to begin recovering and to grow 15.6% to Y1.453 trillion.

For Japanese LCD panel-making equipment, global sales this fiscal year are expected to jump 64% on year to Y584.5 billion, SEAJ said. Next business year, SEAJ expects sales to shrink 28%.

Some Japanese makers have restrained their capital spending on LCD panels after aggressive investment by Asian rivals triggered a supply glut. This supply-demand imbalance will continue to limit LCD panel investment next fiscal year, but it will recover in fiscal 2006, SEAJ said.

So far, many Asian panel makers have invested in sixth-generation and seventh-generation substrates in making LCD panels.