World Equipment Sales Signal Recovery in Microchip Market

Worldwide sales of equipment used to make microchips more than doubled in May, the 11th straight gain after 15 months of decline. An industry group said that’s further evidence of a recovery in the global chip market.

Chip equipment sales soared 126% in May from the same month a year earlier, to $3.28 billion, the Semiconductor Equipment Assn. of Japan said.

Demand for equipment is rebounding as chip makers expand production capacity.

The May sales gain also reflects more spending on equipment by Intel Corp., the world’s largest chip maker; NEC Corp., Japan’s largest maker of personal computers and microchips; Texas Instruments Inc., the No. 1 manufacturer of chips for cellular phones; and Motorola, the world’s No. 2 maker of cellular phones.

Orders for chip equipment are getting a boost as companies retool factories to make chips with finer circuits. Smaller circuits allow more information to be packed onto chips, yielding faster and smaller chips and lower power consumption.

That’s likely to boost the earnings of many of the world’s biggest producers of microchip-making equipment, such as Applied Materials Inc. and Lam Research Corp. in the U.S.; ASM Lithography Holding NV of the Netherlands; and Tokyo Electron Ltd., Nikon Corp. and Advantest Corp. in Japan.

In addition, chip makers and home video-game makers are teaming up to develop and make chips for future generations of video games and digital household electronics, creating new demand for equipment.

Sony Corp. and Toshiba Corp. in March last year agreed to spend $1.12 billion to make chips for PlayStation 2, the successor to the best-selling video game player, while Nintendo Co. is joining with IBM and Matsushita Electric Industrial Co. to develop the successor to its Nintendo 64 game player.

Chipmaking equipment sales figures tend to lag order numbers by up to half a year.