Intel yesterday said that it is to slash its capital spending budgets by about a quarter this year compared to 2002.
The chip giant estimated that it would spend between $3.5bn and $3.9bn (£2.2bn and £2.5bn) on processor manufacturing tools and factories in 2003, down from last year's total of $4.7bn (£2.9bn) .
The move will adversely affect firms such as Applied Materials, Tokyo Electron and ASML Holding, all of which build manufacturing equipment for the world's largest chip maker.
Intel's capital budget cut is "huge", Makoto Sakuma, who manages ¥100bn (£507m) in assets at Asahi Life Asset Management, told Bloomberg.
"Intel's spending plan has an impact on all chip equipment makers in the world because it buys from everybody," he said.
The chip giant's shares rose 20 cents to $17.99 in extended trading on the Nasdaq Stock Exchange yesterday, while shares in its major suppliers fell.
Analysts have predicted that shares of Europe's largest semiconductor equipment maker ASML will fall later today.
Explaining Intel's plans, chief financial officer Andy Bryant said the company had seen no underlying growth for the last two years. He added that there was no recovery in the world's PC market in sight.
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