SEMI President Predicts Return to Double-Digit Growth for Chip Equipment, Materials Industry Over the Next Three Years - Semiconductor Equipment and Materials International - Industry Trend or Event

Cambridge Telcom Report, July 19, 1999

After a steep downturn in 1998, the chip-equipment and materials industry is poised to return to double-digit growth over the next three years.

Stanley T. Myers, president of worldwide trade group Semiconductor Equipment and Materials International, said today that growth of the industry should reach 9 percent this year, then jump to 18.3 percent in 2000 and 21.8 percent in 2001.

His outlooked is based on an informal survey of the SEMI members.

Sales in the industry plunged 21 percent in 1998 to $21.8 billion after reaching a then record $27 billion in 1997.

Myers said he expected sales to reach $28.1 billion in 2000 and then jump to $34.3 billion in 2001.

Most of that -- $15.6 billion -- will represent the sale of new equipment to process wafers, the fundamental building blocks of the chips used in everything from automobiles to cell phones to personal computers.

"I must say, in all the years I have been coming to SEMICON, I haven't seen such a great difference in attitude from one year to the next," said Myers. "What a difference a year makes."

"The bottom line for our industry and SEMI members is that our industry, having suffered a steep decline last year, is rebounding," he added.

He attributed much of that increase in activities related to Internet products.

"The thirst for bandwidth is going to be the driver for the whole thing," he said. "It is the most significant trend in our industry."

Myers spoke to journalists at the kick-off news conference of SEMICON West 99, the annual convention and exhibition underway this week in San Francisco and San Jose. The number of companies exhibiting this year is up 11 percent this year compared to 1998, in large reflecting the renewed optimism of the industry.

He based his predictions on SEMI's July 1999 Consensus Forecast, which indicates semiconductor equipment and materials sales through the remainder of 1999 and into the intermediate future.

The forecast includes input from 85 of the trade association's member companies in the United States, Europe and Japan, representing about 80 percent of worldwide equipment sales.

The SEMICON West gathering features more than 50,000 registered attendees from the industry that makes the machines and materials used to make computer chips and related components.

Despite the downturn, Myers noted that the industry grew at an average 19 percent rate annually between 1988 and 1997.

He also said that following 11 months of declining bookings, equipment orders started climbing last October. The business picked up considerably. Annual worldwide equipment sales for the first quarter of 1999 came to $4.97 billion.

The June 1999 book-to-bill figure, a key indicator that measures the pulse of the industry, will be released Wednesday, July 21.

Based in Mountain View, Calif., SEMI is an international trade association serving more than 2,300 companies participating in the $65 billion semiconductor and flat panel display equipment and materials markets. SEMI maintains offices in Austin, Beijing, Boston, Brussels, Hsinchu, Moscow, Seoul, Singapore, Tokyo and Washington, D.C. The SEMIndex may be found at www.semindex.org and on SEMI's website, SEMI OnLine, at www.semi.org.