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Chip makers to increase spending this year

Up 13 per cent from last year's 55 per cent cut

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The world's chip makers will spend 13 per cent more on plant and equipment this year compared to 2002, market watcher Strategic Marketing Associates (SMA) has forecast.

Last year, semiconductor companies spent $28 billion on capital expenditure. This year, they will spend $31.6 billion. The increase in spending will take place in all territories but the US, where capex is still falling. Overall capex will increase $3.6 billion; in the US it will fall by almost $8 billion, SMA said.

Even so, the US will still account for 30 per cent of the total capex. Asia-Pacific will spend 40 per cent, Japan 20 per cent and Europe ten per cent. Asia-Pacific will lead this year's increase, spending an extra $3.4 billion out of the $3.6 billion overall increased spend.

This year's increases follow major reductions made last year - spending in 2002 was down a whopping $33 billion (55 per cent) on 2001, SMA said, leading to the lowest capex-to-chip sales ratio for 20 years. That some companies are starting to increase their spending suggests they believe they need to "support projected increases in sales and the move to advanced technologies".

They're not all doing so. SMA points out that leading vendors Intel, TSMC, UMC and Chartered are all cutting capex. But their actions are being balanced by increased spending by DRAM makers and integrated device manufacturers. ®

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