The companies that make gear for producing chips are expecting a lucrative year

Worldwide revenue for makers of semiconductor manufacturing equipment is projected to grow 40 percent this year, building on the 10 percent growth recorded in 2003, according to research firm Gartner. Last year, sales of wafer fabrication, packaging and assembly, and testing equipment totaled $22.8 billion.

As customer demand rises due to improving economic conditions, low inventories and tight supplies are boosting prices, Gartner said on Thursday.

"We expect a continuation of strong demand in the back-end segment and finally a strong revival for wafer fab equipment this year," Klaus Rinnen, vice president for Gartner's semiconductor manufacturing and design research group, said in a statement.

The gear makers are benefiting as their chipmaking customers see their own upswing in sales. The positive report from Gartner jibes with findings from other researchers that the semiconductor equipment segment is looking up.

Equipment vendors had mixed results in 2003, though the market was kinder to companies in segments that had longer lead times, Gartner said.

Despite a 12 percent decline in revenue, Applied Materials remained the No. 1 company in the sector with $ 3.2 billion in revenue and a 14 percent share of the market. Tokyo Electron retained its second position as its revenue shot up 21 percent to $2.2 billion and its market share edged up to 9.5 percent. Rounding out the top five were ASML, Nikon and Advantest.

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