Or is it? At the Semicon West trade show here, there were rumors that Japan's Yokogawa Electric Corp. may put its semiconductor ATE business on the block. Yokogawa also sells industrial automation equipment, instruments and other products, but those lines are apparently not for sale, according to sources.

Yokogawa has a strong presence in Asia, but the company has been nearly invisible in the U.S. market, according to analysts. For its fiscal year, the company's test and measurement group posted an operating loss of 1.9 billion ($17.8 million) on sales of 67.8 billion yen ($635 million). This compares to a operating profit of 1.1 billion yen ($10.3 million) on sales of 78.5 billion yen ($735.2 million) the previous year.

The Japanese company dismissed the rumor. ''We have no plan at present to divest our ATE business,'' according to a spokesperson from Yokogawa, in an e-mail.

''As you know, market conditions are tough right now. Hence, what we are struggling for in our ATE business is to establish a business structure that can be profitable regardless of what happens in the business environment,'' the spokesperson said. ''In this regard, we are implementing a selection and concentration strategy. However, it does not mean that we will divest the ATE business.''

In any case, it's been a tough cycle for ATE vendors. Many suppliers failed to recover in the last downturn in 2001. And now they face yet another downturn, as the ATE segment is expected to decline by 20.3 percent in 2008, according to Gartner Inc.

"It's a tough business," said Rod Stewart, general manager of the SOC Business Group at Teradyne Inc., in an interview at Semicon West. "The outlook is not terribly strong'' for the second half of the year.

The net result: more consolidation. The long-awaited consolidation finally hit the ATE market late last year, as Teradyne re-entered the flash-memory test business by buying Nextest Systems Corp. for $325 million.

Late last year, Verigy Inc., the ATE spin-off of Agilent Technologies Inc., signed a definitive agreement to acquire DFM chip test vendor Inovys.

Continuing to divest its unwanted lines, Credence Systems Corp. in June entered into a definitive agreement to sell its automotive ATE unit in Amerang, Germany to Japan's Advantest Corp. for $5 million. And last month, ATE gear rivals Credence and LTX Corp. said they are planning to merge in an all-stock merger of equals.

The shakeout leaves the following competitors in ATE: Advantest, Eagle, LTX-Credence, Teradyne, Verigy, Yokogawa and perhaps a few niche players.

For years, analysts insisted there were too many ATE players going after a non-growth market. Many believe there are still too many vendors. So expect another wave of merger and acquisition activity.

"There needs to be more consolidation," Stewart said. "I would not be surprised to see more of it."

Over time, there is room for only ''three or four major players'' in ATE, said Greg Smith, general manager of the Broadband & Computing Business Unit at Teradyne.