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Report: Chip-gear industry having a good year

But enjoy it while it lasts. Gartner says a boffo 2004 won't have a stong sequel next year.

Global chip-gear spending is poised for 66 percent growth in 2004, according to market researcher Gartner.

With this, 2004 is likely to be one of the best years for the semiconductor capital gear market, Gartner said in a report released Thursday. Earlier the researcher had predicted growth of 51 percent this year.

The market will see a decline next year, however, when gear spending is projected to drop 0.6 percent.

For 2004, revenue from equipment for wafer fabrication factories is set to climb to 72 percent, while packaging and assembly gear revenue will grow 49 percent. Automated test gear revenue will see 52 percent growth during the year, Gartner said. The investments in logic segment chips and memory chips such as dynamic random access memory are the key drivers in 2004.

Worldwide utilization of chip-fabrication plants reached 94.8 percent at the end of the second quarter of 2004, up from 93.2 percent at the end of the previous quarter. This is leading to inventory buildup, which is causing a decline in the third quarter. The utilization rates may drop to below 90 percent in the first quarter of 2005, Gartner said.

In North America, growth for 2005 is projected at 30 percent, partially driven by non-U.S. company investments. But overall spending in the region remains subdued because of growing offshore business. The spending in the Asia-Pacific region is predicted to grow more than 80 percent, while in Europe it may rise about 50 percent, driven mainly by increases in Germany, France and the U.K., as well as Intel's new fabrication plant in Ireland, Gartner said.