By Timothy Prickett Morgan
American semiconductor manufacturers have learned to creatively use capital equipment financing to stabilize their cash flows, and now Comdisco, one of the largest equipment leasing organizations in the world, wants to introduce the concept to struggling Japanese semiconductor manufacturers, who usually own their equipment. According to a report in yesterday’s Nihon Keizai Shimbun, Comdisco will start a lease-back program in Japan starting in January. Under a lease-back program, Comdisco buys the semiconductor manufacturing and testing equipment currently owned by a semiconductor manufacturer – reportedly paying as little as 30% to 40% of the purchase price for relatively new equipment – and then leases it back to the company, effectively shifting a capital asset into an operating expense. Comdisco told Nikkei that it hopes to sign lease-back contracts worth up to 100 billion yen by 2000, driven mainly by chip makers’ huge desires to reduce their depreciation costs and eliminate excess manufacturing capacity. This is not the first time that Comdisco has made moves in the Japanese semiconductor equipment market. In September 1997, the company set up a joint venture with trading house Itochu Corp to provide sales, leasing, refurbishing and remarketing services for Japanese semiconductor manufacturers. That venture was capitalized at 490 million yen (60% put up by Comdisco) and Comdisco had hoped that the joint venture would be able to bring in 20 billion yen in leasing contracts. Obviously, the company has set its sights a bit higher with the lease-back program and, with the current state of the Japanese economy and of semiconductor makers in particular, Comdisco will likely be able to attain its upwardly revised goals, if not exceed them.
