Semiconductor equipment pushouts imminent

Dr. Robert Castellano, The Information Network.

NEW TRIPOLI, USA: The business climate for the semiconductor industry is deteriorating and pushouts of front-end equipment are forthcoming according to a report from The Information Network titled: The Global Market for Equipment and Materials for IC Manufacturing.

Our proprietary global leading indicators had turned down. The hyper-growth already exhibited through 1H 2010 cannot be sustained because the poor macroeconomic climate could not support 100+ percent equipment growth. Pushouts will dramatically affect the lithography sector, which has been riding a wave of stellar levels of purchases primarily from Samsung.

Our proprietary leading indicators, which we have continued to refine over the past 15 years and show a clear correlation with semiconductor equipment sales, indicate that a correction in the front-end equipment market is imminent.Source: The Information Network.

As sales drop in electronic gadgets, the most pronounced affect will be in the DRAM sector, where sales grew 135 percent in Q2 2010 compared to Q1 2009. A slowdown in the PC market will directly impact the DRAM market, including DRAM manufacturers Samsung, Hynix, Elpida, and Micron. Intel in the CPU sector will also be impacted.

While the overall front-end market will suffer pushouts, the lithography sector will be impacted most, where sales of $35 million immersion DUV tools have flooded the market of late.

Year 2010 is becoming very reminiscent of 2000, where poor inventory control, fear of IC shortages, and concern over long waiting times for leading-edge equipment spelled disaster, and we ended the year with $10 billion in excess IC capacity and a shattered equipment industry that took years to claw out of the red and has never fully recovered until this year.

Forecasts for the semiconductor and equipment industries seem to get bigger with each monthly announcement, and the fragile economies of the Western world do not warrant such growth.

Equipment for niche markets and applications such as advanced packaging will not be affected by the pushouts, as they have not exhibited the hyper growth as mainstream ICs.