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Japan fab-tool, materials markets plunge

Posted: 27 Jan 2009 ?? ?Print Version ?Bookmark and Share

Keywords:Japan fab tool market? IC materials? equipment semiconductor?

Like semiconductor equipment suppliers in the United States and Europe, the fab-tool market has also crashed in Japan. And the electronics materials industry, which has been somewhat insulated from the downturn, is now feeling the heat.

On the tool side, Japanese-based semiconductor equipment manufacturers posted a book-to-bill ratio of 0.70 in December, down from 0.75 in November, according to the Semiconductor Equipment Association of Japan (SEAJ).

The three-month average of worldwide bookings was 34 billion yen ($382.7 million) in December, down 32.9 percent sequentially and down 74.2 percent y-on-y, SEAJ said.

The three-month average of worldwide billings was 49 billion yen ($551.5 million), down 27.4 percent sequentially and down 63.5 percent y-on-y, SEAJ said.

These are the lowest numbers in recent memory. In comparison, North America-based manufacturers of semiconductor equipment posted a book-to-bill ratio of 0.93 in December, down from 0.97 in November, according to SEMI.

While fab-tool vendors are suffering, the materials segment is also reeling. Japan's Sumco Corp., the second-largest maker of silicon wafers, slashed its profit forecast and cut capital spending by about 80 percent in the upcoming fiscal year, according to MarketWatch.

Sumco expects net profit of about 18 billion yen ($200 million), down from the 32 billion yen ($360.2 million) profit forecast given in October, according to the report. "The revision puts Sumco on track for a 78 percent decline in profit from 74.88 billion yen ($841.8 million) in the fiscal year ended Jan 31, 2007," the report said.

Another silicon wafer maker, U.S.-based MEMC Electronic Materials Inc., reported Q4 08 net sales of $425.7 million, which represents a decrease of 22 percent from Q3 08 net sales of $546 million, and a decrease of 20.6 percent from fourth quarter 2007 net sales of $535.9 million.

GAAP net income for Q4, using a GAAP tax rate of 33.9 percent, was $73.2 million or $0.33 per share, and includes a $61.2 million charge relating to the decrease in the value of the Suntech warrants. MEMC reported a net of $182.8 million in the previous period and $376.4 a year ago.

"The fourth quarter of 2008 saw deteriorating semiconductor and solar market conditions, amid the rapidly weakening global macroeconomic environment," said Marshall Turner, MEMC's interim CEO, in a statement.

"Our current view of the markets we serve indicates that first quarter 2009 revenue could decline by as much as 50 percent from the fourth quarter of 2008. The reduced pricing and significantly lower factory utilization assumed in this view, the latter of which would result in significant underutilization charges, could result in gross margins declining to the 20 percent range," he added.

Bad to worse
On the gas and materials side, Air Products this week cut 40 jobs in its electronics unit. It also reported net income of $69 million, or diluted earnings per share of $0.32, for its fiscal first quarter ended Dec. 31, 2008. This includes a $0.55 per share charge for the previously announced global cost reduction plan and a $0.10 per share loss from discontinued operations.

First quarter revenues of $2.195 billion declined 9 percent and operating income of $288 million was down 24 percent from the prior year on weaker volumes, primarily in the Electronics and Performance Materials and Merchant Gases segments, and unfavorable currency.

Electronics and Performance Materials reported sales of $407 million, a 21 percent decline. Operating income of $25 million declined 63 percent from the prior year. Electronics manufacturing declined significantly on falling consumer demand.

In a statement, John McGlade, chairman, president and CEO of Air Products, said: "Over the quarter, we saw further deterioration in business conditions, resulting in one of the weakest economic environments we've ever seen. It was evident that the shocks to the global economy have shattered consumer confidence, which has significantly impacted customers' operating rates across most of our end markets."

Meanwhile, Cabot Microelectronics Corp., a supplier of chemical mechanical planarization polishing slurries, said revenue during the first fiscal quarter was $63.0 million. The soft global economic environment impacted demand for the company's products, driving a 32.5 percent decrease in sales from the same quarter last year and a 30.1 percent reduction from last quarter.

Net income for the quarter was $0.1 million, down from $12.2 million in the same quarter last year and $8.2 million last quarter, primarily due to the lower level of sales driven by the global economic downturn.

Diluted earnings per share were $0.01 this quarter, down from $0.51 reported in the first quarter of fiscal 2008 and $0.36 reported in the previous quarter.

"We experienced an extraordinary and precipitous drop in demand for our products this quarter, which we believe reflects current market conditions and is generally consistent with the decrease in overall industry demand," said William Noglows, chairman and CEO of Cabot, in a statement.

- Mark LaPedus
EE Times





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