Lithography tools from Canon and Nikon led the equipment market with sales of $1.2 billion in 2006, with Nikon ending the year with a 57 percent market share, according to the firm. The lithography sector will decrease to $1 billion in 2007.

The overall array processing equipment market will recover in 2008 and 2009, growing 28 percent and 8 percent, respectively, according to the firm.

"Because of the continuing overcapacity situation in the LCD business, many companies are slowing capacity expansion by trimming budgets," said Robert N. Castellano, president of The Information Network, in a statement. "AUO, CMO, and LG.Philips LCD recently announced that they have trimmed their 2007 capex amounts following slower growth and rapid price declines. Prices of a 37-inch TV panel dropped from $700 in mid-2006 to less than $500 in January 2007.''

There are other bad signs in the arena. ''Consolidating as a means of controlling capacity is one strategy,'' added Castellano.

''AU Optronics (AUO) merged with Quanta Display, and there have been rumors that Philips is shopping its 32.9 percent stake in LG.Philips LCD. Second-tier panel makers, such as CPT and HannStar could consolidate to not only get a better handle on inventory, but to compete against first-tier suppliers that together control 73 percent of the market,'' he said.

''Fab utilization rate reduction is another strategy, and LCD manufacturers have reduced utilization rates to as low as 80 percent in 2007 from 95 percent in late 2006, but to no avail as price erosion continues,'' he added.

By: DocMemory
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