WW semi equipment spending to drop 20% in 2008, Gartner reports
Since late December, reported DRAM spending plans have declined to the point where the market research company is now projecting a drop of almost 47% in DRAM spending and 29% in total memory in 2008.
By Ann Steffora Mutschler, Senior Editor -- EDN, April 16, 2008
Due to a weakening US economy and collapsing DRAM market, market researchers at Stamford, Conn.-based Gartner Inc now expect spending for worldwide semiconductor capital equipment to fall 19.8% from last year to $47.5 billion. Gartner previously forecast a 10% drop for semiconductor manufacturing equipment spending this year.
Klaus Rinnen, managing VP for Gartner’s semiconductor manufacturing group explained that the expected bursting of the DRAM capital spending bubble has finally happened, as rampant overcapacity in that sector drove unit prices well below cash costs for most manufacturers. “Since our last update in late December, reported DRAM spending plans have declined to the point where we are now projecting a drop of almost 47% in DRAM spending and 29% in total memory in 2008,” he said in a statement.
“The memory market peaked last year by spending over 57% of total revenue for capital expansion, a level which cannot be supported by the anticipated lackluster revenue growth. We expect this to drop significantly to the low 40% range for this year and 2009,” Rinnen said.
In the equipment market, all segments are expected to decline in 2008 with selected technology buys to occur as logic manufacturers begin to install 45 nm process capability and foundries continue to ramp 65 nm production, but these investments will occur at a measured rate. “We do not expect many integrated device manufacturers (IDMs) to increase investments, and in most cases their spending will actually decline. Overall capital spending on logic will decline by 7.6%," he continued.
In the wafer fab equipment segment, Gartner expects worldwide spending to decline 17.4% this year despite a small increase in NAND flash, as the sharp decline in DRAM-related spending will hit hard at companies with a high level of exposure to the memory market. Recovery should begin in the second half of the year as DRAM supply and demand comes into balance, the company noted.
In terms of the packaging and assembly equipment market, worldwide spending is expected to fall 18.1% in 2008, after declining 3.7% in 2007, with recent data suggesting that the industry may have hit the bottom in Q1. Gartner said it is still unknown as to whether the market will begin a recovery in Q2, or if industry drivers remain weak, resulting in a delayed order picture until late this year or early next year.
Finally, the market for automated test equipment, which declined 14% in 2007, is expected to experience a similar decline of approximately 13% this year, as test providers remain cautious with capital budgets, although Gartner expects improved market conditions beginning in Q2 and Q3, and increased orders for memory testers occurring by late in Q2 and early in Q3 as test capacity requirements increase for newer DDR memory generations.
