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Global chip industry to drop by 9.6 percent in 2005

Posted: 29 Dec 2004 ?? ?Print Version ?Bookmark and Share

Keywords:ic? equipment? materials? semiconductor?

According to "The Global Market for Equipment and Materials for IC Manufacturing," an article published by the Information Network, the IC industry will reach more than 53 percent year-on-year (y-o-y) growth for 2004 but will decline by 9.6 percent in 2005 and 5 percent in 2006.

Robert Castellano, president of the firm, said, "Late 2003 and early 2006 forecasts of hyper growth in the equipment market have lead to excess capacity, excess inventory, layoffs, lower profits, pushouts and cancellations, which we warned of in early August." Castellano explains further, "While the forecasts may have ironically been correct, clearly not all that equipment was needed in 2004, and the overshoot has served to illustrate that the cyclical nature of the semiconductor industry remains despite lessons learned in 2001 and best efforts in inventory control."

The firm adds that the current chip inventory exceeds $2 billion, thereby, deeming to have warnings and layoffs in the industry. Further, if IC manufacturers are not able to acquire equipment on time and at reasonable costs, they may not be able to supply the chips according to the clients' orders or expand their capacities, which would definitely affect their competitiveness, financial conditions and operations.

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