Déjà vu in the equipment market?

Dr. Robert N. Castellano, The Information Network

NEW TRIPOLI, USA: Historically, the equipment industry has had several years of negative growth two years running. In no situation did growth exceed 23 percent during the following year. And, in none of these years, did we have such a severe downturn in the worldwide economies that still hasn't recovered, such as in 2010.

Yes, we had great growth the second year, but not the first. That's why I don't see the 50 percent growth happening in 2010, but we do in 2011.Source: The Information Network

We have been saying for many years that the industry underwent a paradigm shift following the downturn in 2001. Why should 2010 be any different when it comes to huge capex on semiconductor equipment? The semis will continue to spend less and retain profits.Source: The Information Network.

One more thing that is disturbing in our opinion. We are worried about forecasts of excessive growth in chip sectors that may not materialize and give us a repeat of 2000. Indeed, 2000 may reach the 50+ percent equipment growth that SEMI and Gartner are predicting, but maybe for the wrong reasons.

Any readers with some type of longevity will remember about erroneous forecasts of huge demand for DRAMs in 2000, when semis bought excess equipment because lead times were getting longer and they bought just in case the forecast for a huge DRAM market in 2000 would indeed materialize.

Recent reports about Samsung buying all the lithography tools they can get their hands on are of deep concern. It could force us into the same situation in 2010 followed by a disastrous 2011. A recent report forecasting 40 percent growth in DRAMs by iSuppli brings up visions of déjà vu all over again.