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Japan chip gear orders exceed sales but stay weak

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CIOL Bureau
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TOKYO, JAPAN: Orders for Japanese equipment used to make semiconductors outpaced sales for the third straight month in June, a sign of a recovery in chip makers' investment in subsequent months.

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Restocking of PCs is helping semiconductor demand climb from record low levels, buoying quarterly earnings at Intel Corp, the world's largest chip maker, and the outlook at memory chip giant Samsung Electronics.

The strongest chip makers are now placing orders for machines to form silicon wafers into smaller and more powerful microchips, ahead of what many see as the last round of consolidation in the sector.

Orders for Japanese chip-making equipment rose for the fourth straight month in June to 49.46 billion yen ($525 million), outpacing sales of 36.77 billion yen, calculations based on industry data showed on Thursday.

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The orders were still down 47.4 percent from a year earlier.

Chipmakers are under chronic pressure to invest in new machines to produce more chips, which in turn forces prices down and spurs further investment until someone drops out of the race.

The ratio of the three-month moving average of orders to sales stood at 1.27 in June, preliminary figures from the Semiconductor Equipment Association of Japan showed.

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That means that for every 100 yen of sales, chip makers placed new orders worth 127 yen with Japanese equipment makers.

It compared with 0.66 in May and was the first time the figure had risen above 1 in 10 months, signaling a recovery in subsequent months.

Orders for machines to process, test and slice silicon wafers into microchips take from a month to a year to fill. Japan is home to chip equipment makers such as Tokyo Electron Ltd, Advantest Corp, Nikon Corp, Disco Corp and Yokogawa Electric Corp.

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