The reason is a practical one: it will require almost $1 billion to develop the essential technology for the next generation of chip-making equipment.

Last year, the semiconductor industry in the United States created a joint research organization, called Sematech, to design advanced chip-making equipment.

Applied Materials, a leading supplier of chip-making equipment, also said new orders had increased significantly.

This gas is then channeled directly to the chip-making equipment.

But in a troubling sign for makers of chip-making equipment, Intel cut its spending budget for 2002 by 25 percent.

It is also trying to keep alive the endangered American manufacturers of chip-making equipment.

Worse, the American share in chip-making equipment also fell dramatically, leaving the industry increasingly dependent on foreign suppliers.

A closely followed measure of demand for chip-making equipment rose in June, the second consecutive increase after hitting its lowest point in a decade.

Applied Materials, the world's largest supplier of chip-making equipment, reported a narrow first-quarter loss yesterday as sales declined 58 percent from the year-earlier period.

Indeed, there were some glaring errors made in Sematech's effort to save chip makers and producers of chip-making equipment.