Global chip gear sales seen up 9.1 percent in 2006: SEMI

MAKUHARI, Japan (Reuters) - Global microchip equipment sales will likely rise 9.1 percent in 2006, followed by two years of double-digit growth as chip makers invest aggressively in advanced production plants, an industry group said on Wednesday.

The latest forecast for 2006 by California-based Semiconductor Equipment and Materials International (SEMI) was up from its projection in July of 8.1 percent annual growth.

"A key indicator of the health of the semiconductor industry is wafer fab (factory) capacity utilisation," SEMI chief executive Stanley Myers told a news conference.

"We expect utilisation rates to remain high in the foreseeable future."

Semiconductor International Capacity Statistics, which groups more than 40 global chip makers, last month said the utilisation rate of the world's microchip plants rose for a second straight quarter in July-September, sending shares in Advantest and other chip-gear makers higher.

Sales of tools used to make and test microchips, which work as the brain for computers, mobile phones and many other electronics, would likely total US$35.97 billion in 2006, up from estimated sales in 2005 of US$32.95 billion, SEMI said.

The 2005 figure would be an 11.2 percent decline from 2004, with chip-gear demand hit by a cyclical downturn in the semiconductor industry.

SEMI expected chip-equipment sales to grow 12.3 percent in 2007 to US$40.4 billion, and a further 15.4 percent to US$46.63 billion in 2008.

By region, Japan would likely hold onto its title as the world's largest market for semiconductor tools in 2005, with estimated sales of US$8.04 billion, followed by US$5.89 billion in South Korea.

Japan's Elpida Memory Inc, the world's fifth-largest DRAM chip maker, in October raised its capital investment plan for the year ending in March by 32 percent to 190 billion yen (US$1.57 billion).

Also in October, Japanese electronics maker Toshiba boosted its capital spending budget for microchips by one-third to a record 225 billion yen for the year to March so as not to fall behind rival Samsung Electronics Co Ltd in the cost competitiveness of its cash cow NAND flash memory.

"Japan remains the world's leading market for semiconductor capital equipment, and it is expected to remain in that position throughout the forecast period," SEMI's Myers said.

In 2008, the last year of SEMI's latest forecasts, semiconductor equipment sales in Japan are expected to total US$10.67 billion, followed by Taiwan's US$9.09 billion and US$8.18 billion in South Korea, SEMI said.

South Korea's Samsung, the world's top memory chip maker, in September announced a US$33 billion, seven-year investment plan to add new production lines, aiming to more than treble its chip sales by 2012.

Additional reporting by Yuko Inoue.

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