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Electronic News, Dec 3, 2001 by Jeff Chappell

The 25th anniversary of Semicon Japan will have more companies than ever before, but it will be the first time since 1994 that the show will post a drop in the number of attendees.

Host Semiconductor Equipment and Materials International (SEMI) expects attendance to be down by about 20,000 off last year's peak of 121,155, making Semicon Japan 2001 one of the very rare years in which attendance drops. With the exception of a slight decline in participation between 1990 and 1994, attendance at the show has grown or remained level with the prior year since its inception in 1976.

It will still be a large show with 1,641 companies--45 more than last year--from 27 countries participating in the exhibition, which runs from Dec. 5-7 this week at the Nippon Convention Center in Makuhari, outside of Tokyo. The show is large enough and important enough to still draw OEM and materials suppliers from around the globe, but the anecdotal evidence points to nearly every company scaling back their plans for the show. Many companies have said they are sending less equipment for display than usual and are sending far less support personnel, as budgets have been drastically cut over the course of 2001.

And it's little wonder. As the show gets under way here in the final month of 2001, numbers have begun to statistically confirm what everyone already knew about this year: It was a bloodbath.

Some Ugly Numbers

At the peak of the cycle, in the third quarter of 2000, OEM bookings totaled slightly more than $16 billion, while billings were $13 billion, according to SEMI. A year later, at the conclusion of the third quarter, bookings were less than $4 billion and billings were slightly less than $6 billion. SEMI presented its latest market figures and its quarterly briefing last week.

"The order level of September 2001 was the same level it was in late 1998-1999," said Craig Klootwyk, SEMI equipment analyst.

When the final figures are tallied for this year, SEMI expects the 2001 equipment market to reflect negative growth of 38 percent compared to last year, or $18 billion less than last year.

Test equipment alone shrunk from a $2.7 billion market in the third quarter of last year to a $600 million market in the third quarter of this year. "Test equipment is about 54 percent of what it was in August of 1998 during the last downturn," Klootwyk noted.

Although SEMI's annual consensus forecast wasn't completed in time for the statistics briefing, the consortium predicts that the market will decline further in 2002, or at best be flat with this year. By comparison, Gartner Dataquest predicts next year's equipment market to be down 8 percent to 13 percent, while IC Insights predicts it will be down 25 percent. Only VLSI Research is predicting positive growth with a very modest 3 percent.

In light of these numbers, it's no surprise attendance will likely be down considerably at Semicon Japan. With the most positive estimates for equipment suppliers not predicting any sort of improvements until the second half of next year and no capacity buys coming until 2003 or 2004, look for OEMs and their suppliers to be talking leading-edge technology at this year's Semicon Japan.

Applied Materials' announcement last week is perhaps indicative of the tone the show will take. With only a tiny fraction of the current fab capacity geared to 0.13-micron, Applied's gate stack technology announcement is nevertheless looking down the road at the 0.10- and 0.07-micron technology nodes (See related story on page 12.)

Many OEM executives have noted in recent months that one of the few positive aspects of this lengthy downturn has been that semiconductor manufacturers have plenty of time to evaluate new and competing technologies, opening the way for suppliers to grab new market share. Companies will likely pepper Semicon with new products or technology for markets where they haven't traditionally dominated.

Agilent Technologies Inc., for example, today is taking the wraps off its latest Versatest volatile memory tester, the Versatest Series Model V4100 TDS. Calling it compact, with a footprint of 5.3 square feet, and low cost, Agilent said the TDS is ideal for test program development and debug.