Global semiconductor manufacturing equipment spend declined 46 percent in 2009

STAMFORD, USA: Worldwide semiconductor capital equipment spending totaled $16.6 billion in 2009, a 45.8 percent decline from 2008, according to final results by Gartner Inc. In major segments, wafer fab equipment declined 47 percent, while back-end equipment (BEE) decreased 40 percent, as both areas were hit hard by reductions in capital spending.

"In the past two years, the semiconductor industry responded to increasingly bad economic news by rapidly stopping all but essential spending in an attempt to preserve cash in uncertain economic times," said Dean Freeman, research vice president for Gartner's semiconductor manufacturing research group.

"In the memory sector, continuing losses resulting from plunging prices drove memory capital spending down 54 percent from an already depressed 2008 level. Logic and mixed-signal spending declined 26 percent as manufacturers concentrated on technology upgrades to the next line width to position themselves for the recovery," Freeman said.

"By the end of the year, the major companies resumed spending, with a focus on implanting the latest technology throughout their organizations. We expect this trend to continue in 2010, with technology upgrades accounting for the majority of spending — at least through the first half of the year."

Despite a 38 percent decline in revenue in 2009, Applied Materials increased its worldwide market share to 15.1 percent (up from 13.2 percent in 2008). Tokyo Electron returned to the No. 2 position for semiconductor equipment, overtaking ASML (see Table 1). In 2009, only three companies had equipment sales greater than $1 billion, compared with six in 2008 and 10 in 2007.

Table 1: Top 10 Worldwide Semiconductor Manufacturing Equipment Vendors by Revenue Estimates (Millions of US Dollars)Note: Data includes revenue from acquisitions in 2009 for the entire year. 2008 data is before acquisitions. Growth is organic as well as through acquisitions. Source: Gartner (April 2010)

2009 was a challenging year for wafer fab equipment (WFE) companies, because wafer fab revenue declined for the second straight year. WFE revenue dropped 47.4 percent year over year to $12.7 billion. The vast majority of purchases were for technology upgrades.

The packaging assembly equipment (PAE) market declined 32.2 percent, with sales of just over $2.7 billion in 2009. In the traditional packaging space, companies selling copper wire bonders performed substantially better than the overall market. As advanced packaging segments and new markets, such as through-silicon via technology, become more prominent, more equipment makers will likely begin participating in the packaging and assembly market space.

In the automated test equipment segment, sales fell 53 percent in 2009, resulting in a market size of $1.15 billion. The first quarter of 2009 was essentially nonexistent for test vendors. Visibility returned late in the year, and 2010 is set to realize excellent growth, especially for the memory test segment, which is expected to see more than 100 percent growth. Strong growth is expected across all major test equipment segments.