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Report: Silicon wafers on the rise

The square inches of silicon wafer shipped worldwide jumped sharply in 2002, while revenue grew at a modest rate, a new report from a semiconductor industry group says.

The square inches of silicon wafer shipped worldwide rose sharply in 2002, while revenue grew at a modest rate, according to a new report from a semiconductor industry group.

Silicon wafers, which serve as a base material for building semiconductors, reached shipments of nearly 4.7 billion square inches last year, up nearly 19 percent over the previous year, according to a report released late Thursday by the Semiconductor Equipment and Materials International ().

Revenue, meanwhile, climbed to $5.5 billion for 2002, up a slight 5.8 percent compared with the previous year.

Demand for the new 12-inch, or 300-millimeter, wafers gave a slight lift to revenue--which has been depressed over the past two years, said Stanley Myers, chief executive of SEMI. Revenue reached as high as $7.5 billion in 2000.

While SEMI is pleased with the growth in shipments, the lackluster revenue performance may make it difficult for silicon manufacturers to invest in production capacity, Myers noted.

The new fabrication plants, or fabs, moving into production are making wafers 300 millimeters in diameter--a much more difficult task than producing the 200-millimeter wafers found today.

But Intel and only a smattering of other players can afford to build new fabrication plants, which cost upwards of $3 billion to build. Companies generally find they can only justify the cost of building new fabs if the amount is about one-third or less of their annual revenue.

During the fourth quarter, silicon wafer shipments reached 1.1 billion square inches, up 29 percent from year ago figures. However, shipments declined 10 percent on a sequential basis, according to the SEMI report. Most of the quarter-to-quarter decline stemmed from seasonality in the industry, Myers said.

"Basically, seasonal demand has dropped (shipments) down, and I wouldn't be surprised to see (them) stay down, plus or minus 5 percent, over the next couple of months," he said.