Worldwide semiconductor capital equipment Sspending to return to growth in H2-2009

STAMFORD, USA: Worldwide semiconductor capital equipment spending will grow 47.3 percent in the second half of 2009, but due to the steep declines in the first half of the year, the market is projected to decline 47.9 percent in 2009, according to Gartner Inc.

Worldwide semiconductor capital equipment spending will rebound in 2010, when revenue is forecast to increase 34.3 percent (see Table 1). All segments of the market are expected to grow in 2010.

"Equipment purchases for the remainder of 2009 and the first half of 2010 will be mostly technology buys, as memory companies get ready for copper implementation, and double patterning for critical geometries in the 5x nm and 4x nm generations," said Dean Freeman, research vice president at Gartner.

"Capacity will begin to ramp in the second half of 2010 as businesses and consumers begin to open up their pocket books to purchase electronic goods, and more consistent semiconductor growth should be occurring worldwide."

Table 1
Worldwide Semiconductor Capital Equipment Spending Forecast, 2008-2013 (Millions of Dollars)Source: Gartner (September 2009)

Worldwide wafer fab equipment (WFE) spending is expected to decrease 48.8 percent in 2009. For 2010, the most likely scenario is for WFE spending to increase 38.3 percent, paralleling anticipated growth in capital spending.

Worldwide packaging and assembly equipment (PAE) spending is forecast to decrease 43.1 percent in 2009, then increase 40.5 percent in 2010. The recovery for PAE began in the second quarter of this year as the market bounced off its sharp correction in the fourth quarter of 2008 through the first quarter of 2009.

For 2009, worldwide automated test equipment (ATE) is on pace to decline 36.5 percent. After falling substantially for several quarters, the ATE market recovered in the second quarter of this year. Growth is expected to continue over the next several quarters as device demand improves.

Semicon equipment industry outlook bottomed out in Q2-09

STAMFORD, USA: The outlook for the semiconductor equipment industry is beginning to improve, as it appears capital equipment spending has bottomed out in the second quarter of 2009, according to Gartner Inc. Analysts predict a gradual improvement on a quarter-by-quarter basis throughout the rest of the year and into 2010.

The current uptick in semiconductor sales will not be sufficient to overcome the effects of industry-wide overcapacity and low utilization rates in the short term. Worldwide semiconductor capital spending is on pace to total $24.3 billion in 2009, a 44.8 percent decline from 2008 spending of $44 billion (see Table 1). In 2010, worldwide capital equipment spending is forecast to reach $29.4 billion, a 20.9 percent increase from 2009.

“The impact of the economic crisis has hit the semiconductor equipment industry hard, but signs of life are returning,” said Klaus Rinnen, managing vice president at Gartner. “Undoubtedly it will be a long, slow road to complete recovery, but we are seeing the first indications of increased foundry activity to replenish inventories depleted by the cutbacks of the past few quarters.”

Table 1
Worldwide Semiconductor Capital Equipment Spending Forecast, 2008-2013 (Millions of Dollars)Source: Gartner (June 2009)

Worldwide wafer fab equipment spending is expected to decrease 47.1 percent in 2009, following a drop of nearly 33 percent in 2008. In 2009, the etch, clean and planarization segments will be the largest of the front-end equipment areas, followed by deposition and then by lithography. Lithography has been hit especially hard by the downturn as sales for the most advanced 193nm immersion tools in memory have been lukewarm, with capital spending for memory at levels not seen since 2002.

After declining nearly 25 percent last year, the packaging and assembly equipment (PAE) market is expected to fall nearly 47 percent in 2009. A recovery for PAE is likely to be seen in the second half of this year if recent positive economic developments are sustained.

For 2009, the worldwide automated test equipment (ATE) market is forecast to decline 32 percent. While the test market has waded through a difficult period since 2007, it appears that a bottom is forming in the second quarter of 2009. The ATE market now sits at very low market levels, with some test segments very likely realizing substantial capacity reductions. As the industry moves toward a growth phase, the potential for explosive growth in the 2010 and 2011 time frame could be realized.

Rinnen said that overall, the industry has responded as it should when faced with one of the worst downturns in its history —- by eliminating all unnecessary spending, cutting purchases to inventories and not doing anything dramatic. He recommended that for the next few quarters, equipment suppliers focus on quarter-to-quarter growth and let the annual numbers fall where they may.

“Over the past few years, we have seen the semiconductor and electronics industries implement impressive movements in their ability to control and manage inventories,” said Mr. Rinnen. “It appears the industry has learned a painful lesson and can implement improvements on its ability to manage capital investments and capacity and thus bring a return to profitability to all segments.”