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STAMFORD, Conn., July 10, 2008 View All Press Releases

Gartner Says Worldwide Semiconductor Capital Equipment Spending to Decline 22 Percent in 2008

Continued economic uncertainty, combined with weakness in memory markets, will result in worldwide capital equipment spending totaling $49.2 billion in 2008, a 22.4 percent decrease from 2007, according to the latest projections by Gartner, Inc. The numbers are down from Gartner’s April forecast of a 19.8 percent 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 percent with DRAM down 40.5 percent and NAND flash down 19 percent.

“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 (see Table 1). “We are still forecasting a capital spending recovery in 2009, as the oversupply of DRAM capacity is resolved,” Mr. Rinnen said. “However, we have reduced our expectations for capital spending growth because the latest global economic forecasts show lingering concerns.”

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

 

2007

2008

2009

2010

2011

2012

Semiconductor Capital Spending

63,370.5

49,206.4

52,942.4

62,582.3

56,695.9

60,644.9

Growth (%)

5.6

-22.4

7.6

18.2

-9.4

7.0

Capital Equipment

44,743.4

35,505.7

38,971.7

46,861.6

41,921.6

46,055.6

Growth (%)

6.4

-20.6

9.8

20.2

-10.5

9.9

     Wafer Fab Equipment

36,004.6

28,274.4

30,900.1

37,302.7

33,525.2

36,186.2

     Growth (%)

10.6

-21.5

9.3

20.7

-10.1

7.9

     Packaging and Assembly Equipment

5,182.3

4,394.9

4,785.4

5,716.9

5,081.5

5,978.5

     Growth (%)

-3.7

-15.2

8.9

19.5

-11.1

17.7

     Automated Test Equipment

3,556.5

2,836.4

3,286.2

3,842.0

3,314.9

3,890.9

     Growth (%)

-13.7

-20.2

15.9

16.9

-13.7

17.4

Other Spending

18,627.1

13,700.7

13,970.7

15,720.7

14,774.4

14,589.3

Growth (%)

3.9

-26.4

2.0

12.5

-6.0

-1.3

Source: Gartner (July 2008)

Worldwide wafer fab equipment spending is likely to decline 21.5 percent in 2008. Lithography continues to be the strongest segment, with only a 12 percent 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 percent range.

Worldwide packaging and assembly equipment (PAE) spending is forecast to decrease 15.2 percent in 2008. During the forecast period, certain equipment segments will show substantially greater growth. Equipment for advanced processes, such as wafer-level packaging and 3-D 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 expected to decline 20.2 percent 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.

Additional information is available in the Gartner report “Forecast: Semiconductor Capital Equipment Takes Another Hit as NAND Spending Dries Up." The report is available on Gartner’s Web site at http://www.gartner.com/DisplayDocument?ref=g_search&id=716028&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.

 

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