The market for equipment used to make computer chips will shrink more than 12 per cent this year compared to growth of 67.2 per cent in 2004.

The equipment market will fall 12.1 per cent to $32.6bn, according to SEMI's Capital Equipment Consensus Forecast which predicted a fall of just five per cent in November 2004.

China stands out as the region with the largest fall - the market is expected to decline 40 per cent this year.

South Korea is the only area enjoying continued growth - SEMI predicts the market for FAB equipment in South Korea will grow 21 per cent this year.

The figures are seen as a bellwether for future IT industry growth. Respondents see growth returning in 2006 and reaching double figures over the next two years to hit $44.3bn in 2008.

SEMI bases its figures on interviews with firms representing the majority of the equipment makers.

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