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Chip equipment orders plunge

Microprocessor equipment makers face reduced orders and reduced earnings as a result of Asia's currency crisis and a slumping chip market.

Microprocessor equipment makers are facing reduced orders and reduced earnings as a result of Asia's currency crisis and a slumping chip market.

Japanese firms reported December orders had declined by 21 percent in a year-on-year comparison, according to the Electronic Industries Association of Japan, a semiconductor trade group. The steep decline came suddenly, following ten consecutive months of year-to-year increases, according to the Nihon Keizai Shimbun.

The decline is attributed to the volatile currency situation between Korea and Japan. Debt-laden Korean firms, including memory market leaders Hyundai, Samsung, and LG Semicon, have been hurt by Japanese demands for cash in transactions. Japanese equipment makers and other suppliers have refused to honor letters of credit from Korean banks, which were hit hard by currency devaluations and a shortage of foreign reserves.

In addition, Japanese chipmakers have cut back on orders. Some are reacting to the Korean travails and using the opportunity to put off capital spending, Dataquest analyst Bruce Bonner said earlier. "Now that the South Koreans aren't the hypercompetitive force they used to be because they have to watch their pennies, their competitors can pull back their discretionary spending," he told CNET's NEWS.COM.

Memory chipmakers in both Asian countries have put off planned transitions to 64-megabit chips from the 16-megabit chips now in production.

Nihon downwardly revised its projection for "stepper" device shipments to 450, a decrease of 50 units. Japan's leading stepper manufacturer further anticipates another ten percent fall in the next quarter, the Shimbun reported.

Meanwhile, Rival Tokyo Electron plans to cut its capital investment in half for coming year. Advantest also expects that its fiscal 1998 earnings will decline, in comparison with a 70 percent jump in pretax revenues for fiscal year that ends in March.