Let me express it in more detail.
I want to know if “semiconductors” in the original sentence is a noun or an adjective.
If it is an adjective that refers to displays, then I think I have no problem in understand it. If it is a noun, then I feel confused about it. Is the machinery used to manufacture semiconductors?
“semiconductors” is a noun. The machinery is used for two things: (i) semiconductors; (ii) flat-panel displays.
“machinery used for semiconductor and flat-panel displays” would refer to machinery used for (i) semiconductor displays; (ii) flat-panel displays. In that case “semiconductor” is a noun used adjectively (known as an attributive noun). I am not keen to call such words “adjectives”.
In the original text, “used for” is used in a vague and not very satisfactory way. As I mentioned, my guess is that it means machinery used to manufacture semiconductors and flat-panel displays.