Semitool (NASDAQ:SMTL) turned in results for its fiscal fourth quarter that are typical for a small semiconductor equipment maker during a downturn -- it lost money during the current quarter, although it did make money for the full year. However, management's crystal ball is predicting a better year in 2008, with a guidance of $230 million to $250 million in revenue for the year.

Semitool suffered for at least two reasons in 2007. First, its customers decided to slow their pace of capital spending while they absorbed the capacity they had already installed. Second, its largest customer, Advanced Micro Devices (NYSE:AMD), which accounted for 14% of 2006 sales, decided early in the year to conserve cash by reducing investments in manufacturing equipment. Most likely Semitool hasn't been taking as many AMD checks to the bank.

Given these vibes, it isn't too surprising that Semitool's revenue has fallen this year. Q4's tally was $47.2 million compared to $65 million a year ago (a 28% drop) -- not too uplifting. The yearly comparison is not quite as bad -- revenue fell by 11.5% to $215 million from $243 million last year.

Although a number of semiconductor manufacturers have announced lower capital spending plans for 2008, Semitool expects that business will pick up, partially due to an increasing presence in the memory markets. A glance at its largest customer list in the 2006 10-K reveals that flash memory manufacturers like Samsung and the Toshiba/SanDisk (NASDAQ:SNDK) alliance are notably absent. Memory producers account for most of the business at other equipment makers like Applied Materials (NASDAQ:AMAT) and Lam Research (NASDAQ:LRCX), so this could be a big opportunity.

And Semitool has made some inroads. Its products now occupy space in four memory fabs, and it is expecting further growth in the memory area with an increasing use of copper circuitry over the next couple of years.

It isn't easy for a small company to get its equipment on the must-have list in a large semiconductor fab, but I think Semitool has a decent chance of seeing a meaningful memory boost.

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Fool contributor Dan Bloom has no financial interest in any company mentioned in this article. The Foolish disclosure policy didn't experience a slowdown in 2007, and things are looking bright in 2008 as well.