U.S. chip-making tools gain ground Firms increase market share at expense of Japanese rivals.

April 09, 1992|By Valerie Rice | Valerie Rice,Knight-Ridder News Service

SAN JOSE, Calif. -- After seven years of steadily losing ground to Japan, the American semiconductor equipment industry actually gained market share last year at the expense of tough Japanese competitors, according to a new report released yesterday.

The report was the first indication that one of the most vital -- but also most troubled -- sectors of the U.S. electronics industry might be returning to health after ceding world leadership to Japanese companies during the 1980s.

U.S. operations gained 4 percentage points last year, giving them 47 percent of the almost $10 billion worldwide market for chip-making machines, according to VLSI Research Inc.'s annual survey of equipment companies. U.S. companies are now dead even with Japanese firms, which also have 47 percent of the market, down from almost 49 percent in 1990.

"This is a significant shift back to the United States and shows the industry is really doing something right," said Dan Hutcheson, president of VLSI Research and author of the study. "This is the first time we have seen more people actually buying American equipment instead of Japanese equipment in a long time."

The battle over the market for chip-making equipment is considered critical to the competitiveness of U.S. semiconductor companies because most industry leaders believe the country with the best semiconductor equipment will ultimately dominate the more than $40 billion chip business. When the United States lost almost 35 percent of the equipment market to Japan during the 1980s, it suffered an eerily similar fate in the semiconductor arena.

But now all that may be changing. The apparent turnaround in the equipment business comes at a time when a number of U.S. electronics industries -- most notably semiconductors -- are regaining ground lost to Japanese firms. Mired in a recession and burdened with a large number of low priced products, the Japanese semiconductor industry is actually in worse shape than its American competitors for the first time in years. The semiconductor industry is particularly strong in areas such as microprocessors as well as a wide variety of specialty chips.

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