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Gartner Says Worldwide Semiconductor Manufacturing Equipment Spending to Decline 11.6 Percent in 2012

  Worldwide semiconductor manufacturing equipment spending is projected to total $38.9 billion in 2012, an 11.6 percent decline from 2011 spending of $44 billion, according to Gartner, Inc.

“Weak market conditions in the second half of 2011 caused pullbacks in expansion plans throughout the semiconductor manufacturing industry,” said Klaus Rinnen, managing vice president at Gartner. “This investment weakness will continue through the first half of 2012 and will surge in the second half of the year. We’re basing these assumptions on the aggressive spending plans announced by the major semiconductor manufacturers. There is a risk that some capacity expansion plans will slip from the second half of 2012 into 2013.” 

“Downward pressure on utilization rates is easing, with the result that utilizations will begin to climb upwards again in the second quarter of 2012,” Mr. Rinnen said. “Once the supply is balanced, DRAM and foundry manufacturers will need to begin to increase spending to meet an increase in demand, as the PC market rebounds and consumers begin spending as the economy stabilizes.”

Gartner analysts said worldwide semiconductor manufacturing equipment spending will return to double-digit growth in 2013 when spending is projected to total $43 billion, a 10.5 percent increase from 2012 (see Table 1). Worldwide semiconductor capital spending is forecast to total $60.9 billion in 2012, down 7.3 percent from 2011 spending of $65.8 billion in 2011. Capital spending is expected to grow 3.5 percent in 2013.

Table 1

Worldwide Semiconductor Manufacturing Equipment Spending Forecast, 2011-2016 (Millions of Dollars)

 

2011

2012

2013

2014

2015

2016

Semiconductor Capital Spending ($M)

65,754.4

60,937.4

63,042.4

66,863.6

62,540.2

67,894.4

Growth

16.3%

-7.3%

3.5%

6.1%

-6.5%

8.6%

Capital Equipment ($M)

44,041.6

38,926.6

43,030.4

46,293.1

42,862.6

46,474.4

Growth

8.4%

-11.6%

10.5%

7.6%

-7.4%

8.4%

Wafer Fab Equipment ($M)

35,822.4

31,289.5

33,487.0

37,100.0

34,090.8

36,542.5

Growth

13.3%

-12.7%

7.0%

10.8%

-8.1%

7.2%

Wafer-Level Packaging and Assembly Equipment ($M)

1,472.7

1,404.9

1,893.7

2,034.1

2,214.0

2,646.9

Growth

17.2%

-4.6%

34.8%

7.4%

8.8%

19.6%

Die-Level Packaging and Assembly Equipment ($M)

4,311.9

3,997.3

4,766.1

4,305.4

3,859.5

4,004.4

Growth

-12.0%

-7.3%

19.2%

-9.7%

-10.4%

3.8%

Automated Test Equipment ($M)

2,434.5

2,234.8

2,883.6

2,853.6

2,698.3

3,280.6

Growth

-14.9%

-8.2%

29.0%

-1.0%

-5.4%

21.6%

Other Spending ($M)

21,712.8

22,010.8

20,012.0

20,570.5

19,677.6

21,420.0

Growth

36.7%

1.4%

-9.1%

2.8%

-4.3%

8.9%

Source: Gartner (March 2012)

The wafer fab equipment (WFE) market closed out 2011 with spending up 13.3 percent, based on strong momentum in the first half, however, WFE spending is forecast to decrease 12.7 percent. WFE spending in 2012 will primarily be on leading-edge technology, as the 20mm and 28/32 nm ramp up.

Gartner analysts said wafer fab manufacturing capacity utilization will decline into the low 80 percent range by the middle of 2012, before slowly increasing to about 90 percent by the end of 2012. Leading-edge utilization will return to the low 90 percent range by the second half of 2012, providing for a positive capital investment environment.

Back-end equipment markets (which include wafer-level packaging and assembly equipment, die-level packaging and assembly equipment, and automated test equipment (ATE)) will see a modest decline in 2012, but it will be followed by growth and sales of more than $9.5 billion in 2013.

“Above market action in advanced packaging will not be sufficient for a positive growth rate this year, but it will be the driver for growth in 2013,” Mr. Rinnen said.

The capital spending forecast estimates total capital spending from all forms of semiconductor manufacturers, including foundries, and back-end assembly and test service companies. This is based on the industry's requirements for new and upgraded facilities to meet the forecast demand for semiconductor production. Capital spending represents the total amount spent by the industry for equipment and new facilities, as well as the outlay for land, buildings, furnishings, etc... Capital equipment spending includes all equipment needed to process, inspect, and test and package the chip.

This research is produced by Gartner's Semiconductor 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 Manufacturing Focus Area at http://www.gartner.com/technology/core/products/research/markets/semiconductorManufacturing.jsp.

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