SAN FRANCISCO Based on capital spending outlay during the first half of 2005, semiconductor capital equipment companies should not expect strong second-half sales, according to market analyst firm IC Insights.
IC Insights (Scottsdale, Ariz.) recently conducted a sampling of capital outlays by 14 major semiconductor companies, concluding that they cumulatively spent 55 percent of their total 2005 budgets during the first half of the year. The 14 companies studied represent 56 percent of the world's total capital spending for 2005, according to IC Insights' Strategic Reviews Online database. See table below.
Just five of the 14 companies studied spent less than 50 percent of their current budgets in the first six months of this year, IC Insights said. Foundry giant Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) spent almost two-thirds
of its $2.6 billion annual budget in the first six months of 2005, the firm said, while Philips Semiconductors used only about one-third of its planned outlays.
IC Insights cautioned that companies like Chartered Semiconductor, Texas Instruments, Philips and Semiconductor Manufacturing International Corp. (SMIC), which all spent less than 50 percent of their budgets during the first half of the year, should be watched closely for any signs of wavering from their spending plans.
As a result of extended lead times for receiving and installing equipment, SMIC recently
trimmed its third quarter capital spending budget from $200 million to $240 million down to a range of $120 million to $160 million. Philips has also announced its intention to trim $300 million in annual costs semiconductor business by the end of 2006.
Despite some belt tightening by cautious semiconductor companies, IC Insights said, the outlook for industry capital spending appears to be holding steady through the end of next year. The firm said its updated survey of capital spending plans at 46 major semiconductor manufacturers shows industry expenditures being flat in 2005 and flat or just slightly down in 2006.
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