Semiconductor Capital Equipment Spending to Decline 22% in 2008, Says Gartner

Jul 15, 2008 15:57 Nikkei Electronics Asia

Continued economic uncertainty, combined with weakness in memory markets, will result in worldwide capital equipment spending totaling US$49.2 billion in 2008, a 22.4% decrease from 2007, according to Gartner Inc. The numbers are down from Gartner's April forecast of a 19.8% decline in spending for 2008.

Gartner analysts said significant oversupply conditions in the dynamic random access memory (DRAM) and NAND Flash memory segments has led to precipitous price declines and profitability pressures for most of the memory producers. Worldwide memory spending is expected to decline 32.1% with DRAM down 40.5% and NAND Flash down 19%.

"The next six to 12 months will be another period of uncertainty and risks for the semiconductor manufacturing and equipment industries," said Klaus Rinnen, managing vice president for Gartner's semiconductor manufacturing group. "The bursting of the DRAM spending bubble should come as a surprise to no one; the fact that it coincides with downward economic pressures and the uncertain impact on semiconductor demand adds significant risk to an already grim forecast for capital equipment."

All sectors of semiconductor capital equipment spending are on pace for double-digit declines in 2008. "We are still forecasting a capital spending recovery in 2009, as the oversupply of DRAM capacity is resolved," Rinnen said. "However, we have reduced our expectations for capital spending growth because the latest global economic forecasts show lingering concerns."

Worldwide wafer fab equipment spending is likely to decline 21.5% in 2008. Lithography continues to be the strongest segment, with only a 12% decline expected as the increased adoption of 193 immersion continues to take more share than older technologies. Deposition, etch and implant are the hardest-hit segments, with overall declines in the 25% range.

Gartner predicts that worldwide packaging and assembly equipment (PAE) spending will decrease 15.2% in 2008. During the forecast period, certain equipment segments will show substantially greater growth. Equipment for advanced processes, such as wafer-level packaging and 3D and through silicon via process tools, will outperform the market. Traditional packaging tools, such as die bonding and trim and form tools, will be industry laggards during the next several years.

The worldwide automated test equipment (ATE) market is also expected to decline 20.2% in 2008, as test process providers remain cautious. Gartner's current expectations reflect improved market conditions beginning in the second half of this year and set 2009 up for a rebound. As with the PAE market, macroeconomic as well as general industry conditions will have to improve for this growth to return next year.

24 Hours | 7 Days