Chip vendors tighten capital spending screws – again

Too much capacity already

Semiconductor vendors have been tightfisted for two years on the trot, according to Dataquest. Capital spending for 1998 is projected down 22 per cent to $31.6 billion from last year. According to analysts, overcapacity problems lie at the core of most capital expenditure thriftiness. Investment in advanced technology for this year is expected to be minimal, in an industry in its second year of a decline in spending. The top 20 semiconductor spenders are only estimated to part with $21.6 billion, down 15.6 per cent on 1997. These businesses represent 68.3 per cent of worldwide spending. The Asian financial crises and DRAM declines are blamed for Asia/Pacific chip companies suffering, with capital investment in this area expected to fall over 25 per cent during 1998.®