Worldwide Wafer Fab Equipment Market To Grow More Than 43 Percent In 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 the Dataquest unit of Gartner Group Inc. The industry is poised for double-digit growth through 2002. "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," says 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. 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," says 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."