Japan chip, LCD gear demand seen back in growth

TOKYO (Reuters) - Demand for Japanese equipment used to make microchips and liquid crystal displays will likely bounce back to a clear growth path in the next business year, boosted by robust chip and LCD TV demand, an industry group said on Thursday.

Sales of Japanese chip equipment are expected to rise 8.0 percent to 1.59 trillion yen (US$13.9 billion) in the year starting 1 April, up from a previous forecast of 0.1 percent growth, the Semiconductor Equipment Association of Japan (SEAJ) said.

The latest projection comes a day after Sharp, the world's largest maker of LCD TVs, and chips-to-computers conglomerate Fujitsu unveiled big investment plans to meet fast-growing demand.

"It is quite certain that chip demand will be expanding towards the peak year of 2008, and naturally demand for chip equipment comes ahead of chip demand," an SEAJ spokesman said.

The association expects sales of Japanese LCD-making equipment to rise 10 percent to 580.5 billion yen in the next business year, after an estimated 6.0 percent decline in 2005/06.

Demand for Japanese LCD-making tools slowed in the current business year in a pull-back after a record 561 billion yen in sales in the previous year.

But brisk output at major LCD manufacturers in Japan, South Korea and Taiwan is expected to put sales back on a growth trend, the SEAJ said.


Big investments

Japanese suppliers of chip- and LCD-making equipment — potential beneficiaries of the uptrend — include Tokyo Electron Ltd, Advantest Corp, Canon Inc, Nikon Corp, Dainippon Screen Manufacturing Co Ltd and Yokogawa Electric Corp.

Sharp said on Wednesday it planned to spend about US$1.75 billion to boost output at a cutting-edge LCD plant being built in western Japan, while Fujitsu announced it would invest US$1 billion to build a new chip plant to process 300-mm wafers, driving home electronics makers' aggressive investment stance.

For the current business year to March, the SEAJ expects Japanese chip equipment sales to fall 7.9 percent, compared with its previous estimate of an 8.4 percent decline.

Demand for Japanese chip-making tools, which account for about 40 percent of the US$33 billion global microchip gear market, has been hit hard far in the current business year by steep slides in prices of chip-intensive digital electronics.

But orders have been on a recovery trend and usage rates of the world's microchip plants have been on the rise as the semiconductor market emerges from a phase of inventory adjustments.

Underlining recent demand recovery, global sales of microchip-making equipment in November rose for the first time in 10 months, data compiled by the SEAJ and California-based Semiconductor Equipment and Materials International showed.

After the projected 8.0 percent rise in the next business year from April, demand for Japanese chip equipment is likely to grow 11.4 percent in 2007/08 and 10.1 percent in the following year, the SEAJ said.

As for sales of Japanese LCD-making tools, growth will likely reach 20 percent in the year starting April 2007, followed by a 10 percent rise in 2008/09, it said.

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