SEMICONDUCTOR equipment supplier ASM Pacific enjoys a low-cost production base and has benefited from the recent weakness of the United States dollar. The company designs, manufactures and markets industrial equipment and materials for the assembly of semiconductors. Its major customers are Hewlett-Packard, Motorola, Siemens, Intel, National Semiconductor, Sanyo, Samsung and Hyundai. The group holds three per cent of the world market for lead frames and 12 per cent for bonding equipment, two of its principal product areas. It has production facilities in Hong Kong, Singapore and China, with over 80 per cent of sales going to customers in the Far East. Strong demand for capital goods has coincided with the emergence of East Asia as a leading manufacturing base for most types of electronic goods, including personal computers and telecommunications equipment. According to DataQuest, the worldwide market for semiconductors will expand at an annual rate of about 14 per cent to the year 2000, with growth in the Asia-Pacific region particularly strong at more than 20 per cent per annum. The strong yen will hurt ASM Pacific's Japanese rivals. However, competitiveness in this business relies more on product quality than price, which lessens the impact of currency movements. Nonetheless, ASM Pacific has gained on the competition in recent years as its own quality standards and technical capabilities are now comparable to those of Japanese firms, while its products are priced more attractively. The semiconductor market has entered an upturn in the growth cycle. Demand for bonding and packaging equipment will be particularly strong, as worldwide sales growth of such equipment could average between 15 per cent and 17 per cent over the next three to four years. Brokerage Vickers Ballas expects the company's performance to slow over the next few years, following two years of spectacular growth. Sales momentum appears to have eased in the second half of 1994. Nevertheless, earnings growth should exceed 20 per cent over the coming two years.