WW semi capital equipment spending to drop 10% in 2008, Gartner predicts
By Ann Steffora Mutschler, Senior Editor -- EDN, December 19, 2007
As the semiconductor industry overcomes the memory oversupply situation, Stamford, Conn.-based market research firm Gartner Inc. expects worldwide semiconductor equipment spending to total $40.3 billion in 2008, a 9.9 percent decrease from 2007 spending of $44.8 billion.
Klaus Rinnen, managing VP for Gartner’s semiconductor manufacturing group noted in a statement, “2007 was marked by continued strong DRAM investments, shrugging off the realities of a market sector in oversupply, slower NAND spending growth, and disappointed hopes of a foundry spending revival.”
“As we look to 2008, we expect the long overdue capital spending correction in the DRAM market to push the capital equipment market into contraction. Adding on the downside is another slow year from foundry and generally more cautious spending mood, with concerns about a US economic recession rising,” he continued.
On the positive side, Rinnen said NAND flash spending should continue to ramp with a firming pricing picture for logic device segments bringing hope to manufacturers for some upside in capacity spending from this segment.
The firm also predicts that all major segments of the capital equipment market are projected to show negative spending in 2008, with the quarterly picture for 2008 showing a weak first half of the year as DRAM companies slow their capital investments to help get the supply demand picture under control.
Worldwide Semiconductor Capital and Equipment Spending Forecasts (in Millions of Dollars)
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
|
| Semiconductor Capital Spending | 56,312.7 |
59,085.6 |
51,297.3 |
55,721.1 |
63,248.3 |
58,246.3 |
62,653.4 |
| Growth (%) | 19.3% |
4.9% |
-13.2% |
8.6% |
13.5% |
-7.9% |
7.6% |
| Capital Equipment | 41,950.2 |
44,805 |
40,348.1 |
44,284.3 |
49,027 |
44,843.6 | 49,508.8 |
| Growth (%) | 22.9% |
6.8% |
-9.9% |
9.8% |
10.7% |
-8.5% |
10.4% |
| Wafer Fab Equipment | 32,610.1 |
35,559.7 |
31,918.7 |
34,969.1 |
39,402.6 |
36,044 |
39,417.8 |
| Growth (%) | 25.7% |
9% |
-10.2% |
9.6% |
12.7% |
-8.5% |
9.4% |
| Packaging and Assembly Equipment | 5,217.8 |
5,202.1 |
4,699.8 |
5,198.2 |
5,420.4 |
4,933.7 |
5,609.1 |
| Growth (%) | 18.2% |
-0.3% |
-9.7% |
10.6% |
4.3% |
-9% |
13.7% |
| Automated Test Equipment | 4,122.3 |
4,043.2 |
3,729.6 |
4,117 |
4,204 |
3,865.9 |
4,481.9 |
| Growth (%) | 9.3% |
-1.9% |
-7.8% |
10.4% |
2.1% |
-8% |
15.9% |
| Other Spending | 14,632.5 |
14,280.6 |
10,949.2 |
11,436.8 |
14,221.3 |
13,402.7 |
13,144.5 |
| Growth (%) | 10% |
-0.6% |
-23.3% |
4.5% |
24.3% |
-5.8% |
-1.9% |
Source: Gartner
In foundry, the drive to the next technology node will pick up steam, with logic makers needing to invest to meet demand in the second half of 2008, moving the industry into positive growth in 2009.
In the wafer fab equipment segment, Gartner expects revenue to rise 9 percent in 2007, but decline 10.2 percent in 2008. Despite an increase in NAND flash spending, the sharp decline in DRAM related spending will hit hard at equipment companies with a high level of exposure to the memory market with the recovery beginning in the second half of the year as DRAM supply and demand comes into balance, the firm said.
Since Gartner’s October forecast revision, when the firm expected a 3.5 percent decline in 2007, the packaging and assembly equipment market has improved thanks to continued improvements in the spending picture for semiconductor assembly and test services players but continued weak business conditions will yield a market decline of nearly 10 percent in 2008.
Finally, Gartner expect a modest decline of 1.9 percent for the automated test equipment market, as test providers began to restrict capital budgets in the middle of 2007, with 2008 bringing a more substantial decline of 8 percent expected given continued weakness in the device industry and slowing economic conditions.
