Gartner Says Worldwide Semiconductor Manufacturing Equipment Revenue G

    Business Editors

    STAMFORD, Conn.--(BUSINESS WIRE)--April 6, 2005--Driven by strong device unit demand and tight manufacturing capacity, worldwide semiconductor manufacturing equipment sales reached $37.6 billion in 2004, a 64.2 percent increase from 2003, according to Gartner, Inc.
    "The 2004 market was marked by capacity buys with select technologies in especially high demand, such as memory and system-on-a-chip (SOC) test, flip-chip bonding, select deposition, etch and photoresist processing," said Klaus Rinnen, research vice president for Gartner's semiconductor manufacturing and design research group. "The strength of Asia/Pacific, driven by foundry and memory investment and a cooling in growth in Japan, afforded Europe- and Americas-based equipment vendors an opportunity to regain market share against their Japanese rivals."
    The top 10 vendors had double-digit growth in 2004, however Gartner analysts attribute some of these large increases to slow sales in 2003. Applied Materials had revenue increased 96.6 percent in 2004 (see Table 1), as its market share increased from 14 percent in 2003 to 16.5 percent in 2004. Canon experienced the largest growth rate, as its revenue increased 121.5 percent in 2004.

Worldwide Semiconductor Manufacturing Equipment Vendor Revenue Estimates for 2004 (Millions of Dollars)

Rank Rank 2004 2004 2003 2004 2003 Company Revenue Market Revenue Growth Share (%) (%) ------ ----- ------------------- -------- ------- ------- ------ 1 1 Applied Materials 6,310 16.5 3,211 96.6 2 2 Tokyo Electron Ltd. (*) 4,035 10.5 2,175 85.5 3 3 ASML 2,683 7.0 1,435 87.0 4 5 Advantest 2,213 5.8 1,077 105.5 5 6 KLA-Tencor 1,567 4.1 1,005 55.9 6 4 Nikon 1,522 4.0 1,301 17.0 7 7 Novellus Systems 1,198 3.1 805 48.8 8 13 Canon 1,176 3.1 531 121.5 9 9 Lam Research 1,155 3.0 601 92.1 10 14 Dainippon Screen 1,052 2.8 530 98.6 Others 14,939 40.1 10,220 46.2 Total 37,850 100.0 22,891 64.2 ------------- ------------------- -------- ------- ------- ------

Note: (*) Tokyo Electron Ltd. Announced a change in its accounting rules in 2004, switching from shipment-based to acceptance-based revenue recognition. However, because there is no complete financial picture available for 2004, Gartner continues to report the company in its 2004 market share reports based on shipment-based revenue. Note: Data includes revenue from acquisitions in 2003 for the entire year. Source: Gartner Dataquest (April 2005)
    All equipment segments had strong growth. Wafer fab equipment (WFE), the largest sector, saw the strongest growth at 68.6 percent, following a weak performance in 2003. Packaging and assembly equipment (PAE) expanded by 45.9 percent, while automated test equipment (ATE) jumped 58.5 percent.
    While the industry experienced significant revenue increases, Gartner analysts said equipment suppliers experienced mixed results as the year came to an end.
    "The positive outcome for the industry in 2004 was the result of tight supply and demand fundamentals," Mr. Rinnen said. "The industry was severely underinvested heading into 2004, and the need for new capacity became urgent. However, the emergence of excess inventories in the second quarter and the subsequent cutbacks in manufacturing in the second half of 2004 heightened the sense of caution. This led to a premature opening of a supply and demand gap, and equipment orders declined in the latter half of the year."
    Asia/Pacific was the fastest-growing region with spending increasing 108 percent in 2004. Asia/Pacific accounted for more than 50 percent of all equipment spending in 2004, a first in the history of the industry. "Strong spending by foundry, dynamic random-access memory, and semiconductor assembly and test services (SATS) vendors afforded the rapid expansion," Mr. Rinnen said.
    Japan's equipment purchases grew 48.4 percent, while European spending increased 22.8 percent. Gartner analysts said this slower growth was not from a lack of spending by European companies, but was caused by an export of investment money from Europe largely into the Unites States and Asia. After three consecutive years of decline, equipment spending in the Americas grew 17.8 percent.
    Additional information is available in the Gartner report "Semiconductor Manufacturing Equipment Sales Exploded in 2004." This document provides final rankings for the top 20 companies worldwide. This report is available on Gartner's Web site at http://www.gartner.com/DisplayDocument?ref=g_search&id=476348.
    This research is produced by Gartner Dataquest's Semiconductors Manufacturing and Design program. This research program, which is part of the overall semiconductor research group, provides a comprehensive view of the entire semiconductor industry, from manufacturing and design to device and application market trends. To subscribe to this service, please contact Pia Rieppo at 408-468-8710 or at pia.rieppo@gartner.com. More information on Gartner's semiconductor research can be found in the Gartner Semiconductor Focus Area at http://www.gartner.com/semiconductors.

    About Gartner

    Gartner, Inc. is the leading provider of research and analysis on the global information technology industry. Gartner serves more than 10,000 clients, including chief information officers and other senior IT executives in corporations and government agencies, as well as technology companies and the investment community. The Company focuses on delivering objective, in-depth analysis and actionable advice to enable clients to make more informed business and technology decisions. The Company's businesses consist of Research and Events for IT professionals; Gartner Executive Programs, membership programs and peer networking services; and Gartner Consulting, customized engagements with a specific emphasis on outsourcing and IT management. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, and has over 3,900 associates, including more than 1,100 research analysts and consultants, in more than 75 locations worldwide. For more information, visit www.gartner.com.

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CONTACT: Gartner Tom McCall, 408-468-8312 tom.mccall@gartner.com

KEYWORD: CONNECTICUT INDUSTRY KEYWORD: GOVERNMENT BANKING EARNINGS SOURCE: Gartner, Inc.

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