Chipmakers Need to Begin Spending

NEW YORK (TheStreet) -- The business climate for the semiconductor equipment industry is being undermined by chip manufacturers, not the economy.

It is widely known that semiconductor revenue coordinates well with gross domestic product. If economic conditions are favorable globally or regionally, consumers will have the resources to purchase items that contain semiconductors, whether they be PCs, cell phones, or automobiles.

One would think that there would be a correlation between semiconductor sales and equipment purchases, as more and newer equipment would be purchased to manufacture the additional chips. Historically, there was this correlation until the downturn in the industry in 2001. One of the major culprits has been the move to 300mm wafers, which as we have written about previously, utilize half the amount of equipment to process the same number of chips because of the two-times increase in silicon real estate on a 300mm silicon wafer compared with a 200mm wafer.