It was another forgettable year for the chip-equipment and materials industry. Lack of orders, losses, and layoffs rocked the entire industry--again.

The equipment and materials industry suffered its worst year in 2001. In total, VLSI Research Inc. projected the worldwide equipment market fell a staggering 34% in 2001 over 2000 (see Jan. 7, 2002 story ).

What's more, the chip-equipment market is expected to fall by another 24% in 2002, but is also projected to rebound and grow by 9% in 2003 and 25% in 2004, according to VLSI Research (see Dec. 12, 2002 story ).

Actually, suppliers of equipment and materials were somewhat upbeat at the beginning of 2002. With a possible IC recovery projected in the second half of 2002, chip equipment and materials saw a wave of promising orders during the first part of the year. James Morgan, chairman and chief executive of Applied Materials Inc., even saw the first "phase of a recovery" in the May time frame.

In another indicator early this year, the "Big 3" in lithography tool makers--ASML, Canon, and Nikon--claimed to be nearly sold out of high-end, 193-nm (argon-fluoride) tools for 2002, due to strong demand for these systems at the 90-nm process node from select IC makers (see Feb. 11, 2002 story ).

By mid-2002, however, the bottom fell out of the IC industry, causing a ripple effect among suppliers of fab equipment and materials. A glimmer of hope turned into despair, as vendors announced another series of layoffs and losses during the 2002 campaign.

At that time (and even now), the current business climate remained uncertain, in which visibility is poor for tool makers, said Mary Puma, president and CEO of Axcelis Technologies Inc., a chip-equipment supplier in Beverly, Mass. "We have entered into a period of de-accelerated growth," Puma said in an interview with SBN at the Semicon West trade show in San Francisco back in July.

And in the long term, it's going to be tough sledding for vendors. The IC market is not expected to recover at least until "until the middle of next year," declared Arthur Zafiropoulo, chairman and CEO of San Jose-based Ultratech Stepper Inc., in an interview at Semicon in July.

Simply put, it was painful to watch the chip-equipment industry this year. Chip-equipment giant Applied Materials, for example, in November announced its fourth layoff in the last 18 months (see Oct. 4, 2002 story ). And the list was endless. Advantest, Agilent, Credence, K&S, KLA-Tencor, LTX, Mattson, MEMC, SEH, Teradyne, Ultratech, and others separately announced layoffs and losses.

The year ended with another big and unpleasant surprise, this time from Dutch-based lithography giant ASML Holdings NV. ASML announced plans to cut 22% of its workforce, shut down its track division, and sell its thermal equipment unit (see Dec. 12, 2002 story ).

(Return to 2002 Top 10 list or go to No. 3).