GartnerGroup's Dataquest Says Worldwide Wafer Fab Equipment Market to Grow More than 43 Percent in 2000.

Business Editors/High-Tech Writers

SAN JOSE, Calif.--(BUSINESS WIRE)--Jan. 10, 2000

The worldwide wafer fab equipment market is on track for robust growth in the new millennium, with revenue forecast to reach $25 billion in 2000, an increase of 43.5 percent from 1999 revenue, according to Dataquest Inc., a unit of Gartner Group Inc. (NYSE: IT). The industry is poised for double-digit growth through 2002. Dataquest analysts announced their wafer fab equipment forecast at the Industry Strategy Symposium, sponsored by SEMI, at Pebble Beach, California.

"The long-term prospects are good as foundry service providers are positioned to benefit from a strong trend toward the outsourcing of manufacturing in the semiconductor industry," said Clark Fuhs, vice president and director for Dataquest's semiconductors manufacturing programs. "The return to a relative balance of capacity and demand and stable pricing will bring two to three additional years of strong expansion from 2000 through 2002."

On a quarterly run-rate basis, the wafer fab equipment market hit a low point in the third quarter of 1998 and recovered throughout 1999. However, the spurt in shipments since September has turned what was expected to be a low, single-digit growth year for 1999 into one that saw nearly 20 percent growth (see Table 1).

Table 1

Worldwide Wafer Fab Equipment Revenue Forecast Estimates
(Millions of U.S. Dollars)

                     1999     2000     2001     2002     2003     2004
Wafer Fab

Equipment Revenue  17,470   25,073   34,039   38,306   34,564   34,573
Total Growth (%)     19.4     43.5     35.8     12.5     -9.8      0.0
Source: Dataquest (January 2000)

Dataquest's midyear 1999 spending forecast assumed a demand for silicon capacity consistent with just over 12 percent growth, in terms of millions of square inches (MSI) of silicon, for 1999. Actual demand is now estimated for 1999 to be 23 percent higher than 1998 levels, with a large second-half demand spike from a broad range of semiconductors.

"Both better-than-expected PC and cellular phone shipments account for a large part of the unexpected demand for silicon, as well as continued investment in infrastructure associated with Internet applications," said Mr. Fuhs. "Silicon demand actually began to plateau early in the fourth quarter of 1999, as the fabs consuming the wafers were full, and many semiconductor producers began accelerating equipment orders as a result."

Additional information on this market is available in the Dataquest Alert "Wafer Fab Equipment Forecast Update: Multiyear Growth Cycle Accelerates--A Very Exciting 2000." This Alert provides a detailed forecast for the wafer fab equipment market, as well as capital spending, by region through 2004.

This report is produced by Dataquest's Semiconductors Equipment, Manufacturing, and Materials Worldwide program. This program emphasizes an integrated perspective of the interdependence of wafer fabrication equipment technology, semiconductor materials applications, and IC process technology as they relate to the broader issues of manufacturing and capacity. Additional information on Dataquest's semiconductor programs can be found on Dataquest's Web site http://www.dataquest.com/dq/static/offer/programs/scnd.html.

To purchase the report or subscribe to this program, please call 800-419-DATA, or 408-468-8009. More information about Dataquest's programs, descriptions of recent research reports, and full text of press releases can be found on the Internet at http://www.dataquest.com.

GartnerGroup's Dataquest is the recognized leader in providing the high-technology and financial communities with market intelligence for the semiconductor, computer systems and peripherals, communications, document management, software, and services sectors of the global information technology industry.

GartnerGroup, the world's premier business technology advisor, was founded in 1979 and is headquartered in Stamford, Connecticut. GartnerGroup provides unrivaled thought leadership for more than 9,600 client organizations worldwide. It achieved 1999 revenue of $734 million and has 80 locations worldwide. GartnerGroup's 3,400 associates, including 1,200 research analysts and consultants, help clients achieve their business objectives through the intelligent and efficient use of technology. For more information about GartnerGroup's industry-leading research capabilities, services and events, visit us on the Web at http://www.gartner.com.