Gartner Says Worldwide Semiconductor Capital Equipment Spending to Decline 32 Percent in 2009

STAMFORD, Conn., December 18, 2008 —

An economic recession of unknown proportion, combined with supply-side issues, has semiconductor manufacturers shifting into panic mode for the first half of 2009, cutting capital spending even more deeply than in 2008, according to Gartner, Inc.

Worldwide semiconductor capital equipment spending is expected to decline 30.6 percent in 2008 (see Table 1) and total $31.1 billion, this is down from Gartner’s October forecast of a 25.2 percent decline. Worldwide capital equipment spending in 2009 is forecast to decline 31.7 percent. This is down from Gartner’s earlier projection of 2009 spending declining 12.8 percent.

“The recession has come at a time when the overall semiconductor and semiconductor equipment industries were already in a vulnerable position,” said Klaus Rinnen, managing vice president for Gartner’s semiconductor manufacturing group. “Device makers across all segments and even in the NAND and DRAM industry have begun to take steps to lower production rates and shutter fabs that are not cost-effective. We are seeing fabs postponed, and what little capex (capital expenditure) there is, it is selectively focused on new technologies.”

Table 1
Worldwide Semiconductor Capital and Equipment Spending Forecasts (Millions of Dollars)

	2007	2008	2009	2010	2011	2012
Semiconductor Capital Spending	63,318.6	46,055.9	30,356.1	34,588.8	43,733.2	51,824.0
Growth (%)	5.4	-27.3	-34.1	13.9	26.4	18.5
Capital Equipment	44,743.4	31,055.5	21,204.0	24,957.0	31,363.4	36,482.4
Growth (%)	6.4	-30.6	-31.7	17.7	25.7	16.3
Wafer Fab Equipment	36,004.6	24,867.8	16,642.7	19,351.5	25,009.1	29,727.4
Growth (%)	10.6	-30.9	-33.1	16.3	29.2	18.9
Packaging and Assembly Equipment	5,182.3	3,698.5	2,564.8	3,232.1	3,690.0	3,934.7
Growth (%)	-3.7	-28.6	-30.7	26.0	14.2	6.6
Automated Test Equipment	3,556.5	2,489.3	1,996.6	2,373.4	2,664.2	2,820.2
Growth (%)	-13.7	-30.0	-19.8	18.9	12.3	5.9
Other Spending	18,575.2	15,000.4	9,152.0	9,605.3	12,242.5	15,103.0
Growth (%)	3.1	-19.2	-39.0	5.0	27.5	23.4

Source: Gartner (December 2008)

Worldwide wafer fab equipment spending is on pace to decline 30.9 percent in 2008, and decline 33.1 percent in 2009. Lithography continued to be the strongest segment in 2008, with only a 22 percent revenue decline expected as the increased adoption of 193 immersion continues to take more share than older technologies. However, in 2009, lithography will decline 38 percent as memory manufacturers slow the adoption of new immersion steppers and continue to work with older models.

Worldwide packaging and assembly equipment (PAE) spending will fall nearly 30 percent, both in 2008 and 2009. Equipment for advanced processes, such as wafer-level packaging, and 3-D processes, such as TSV, will outperform the general PAE market. Inspection tools for these advanced processes will also grow above the market as they move into volume production levels that require higher wafer yields. Traditional packaging tools, such as die and wire-bonding tools, will be industry laggards in the coming years.

After declining nearly 30 percent in 2008, the automated test equipment (ATE) market will fall nearly 20 percent in 2009. This drop will bring three consecutive years of double-digit declines for the ATE market. For 2009, Gartner projects that tester sales will fall below the $2 billion mark. At these spending levels, test capacity is being taken out of the system. While this destroys any positive view of 2009, it will open up 2010 for potentially more than 20 percent growth if macroeconomic conditions meet or exceed expectations.

Additional information is available in the Gartner report “Forecast: Semiconductor Capital Equipment Demand Suffers as Customers Cut Spending to the Bone." The report is available on Gartner’s Web site at http://www.gartner.com/DisplayDocument?ref=g_search&id=842031&subref=simplesearch.

This research is produced by Gartner’s Semiconductors Manufacturing program. This research program, which is part of the overall semiconductor research group, provides a comprehensive view of the entire semiconductor industry, from manufacturing to device and application market trends. More information on Gartner's semiconductor research can be found in the Gartner Semiconductor Focus Area at http://www.gartner.com/it/products/research/asset_129175_2395.jsp.

 

Contact:


Christy Pettey
Gartner
+1 408 468 8312
christy.pettey@gartner.com


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