- 18 August 2006 -

Robust equipment sales decelerating more rapidly than previously forecast

While suppliers of production equipment to the chip industry have enjoyed a strong demand for their wares over the past several years, the latest quarterly EquipmentFutures report sees previous double-digit sales growth rates quickly decelerating to a single-digit rate sooner than previously forecast.

The quarterly updated forecast offered by Strategic Marketing Associates (SMA) and Wright Williams & Kelly, Inc. (WWK), projects annual sales growth to decelerate to about a 5.0% rate by mid-2007 followed by a more attractive cumulative growth rate of about 17% p.a. over the next four years. Distinguishing itself from other industry forecasts, EquipmentFutures takes into account not only semiconductor and equipment sales but also end market demand.

"Although June quarter equipment sales were up nearly 60% compared to the same quarter a year ago, we anticipate a more rapid deceleration to single-digit sales growth by mid-2007," said George Burns, SMA president. He noted that the semiconductor industry continues to follow historical cyclical growth patterns dating back to 1976, adding that current market research still supports equipment sales strengthening by mid-2008 as chip makers add production equipment required to support the most advanced process technologies.

The report is structured to track six individual equipment groupings, namely: lithography, chemical mechanical polishing (CMP); etch and clean; implant & thermal processing; metal deposition; and non-metal deposition. The just updated outlook reports:
- Of the six equipment groupings tracked, all will continue to grow over the five-year forecast but at a lower rate.

- Flash memory content in consumer electronics will be a primary growth driver for the semiconductor industry.

- Consumer electronics is forecast to grow at an average annual growth rate of about 19% over the next five years, over a percentage point higher than the average annual growth rate forecast for equipment sales.

According to Daren Dance, WWK vice president of technology, "Our quarterly outlook offers an essential strategic planning tool for suppliers of production equipment and materials as well as chip makers. Financial analysts who need to track leading market indicators in the semiconductor industry can also benefit from this unique set of reports." He noted that the impact of the International Technology Roadmap for Semiconductors (ITRS) and other market considerations are included as important inputs to the forecast.

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