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Gartner Forecasts Worldwide Semiconductor Capital Equipment Spending to Increase 14 Percent in 2006 |
STAMFORD, Conn. April 19, 2006 - Led by back-end equipment segments, the worldwide semiconductor capital equipment market is forecast to total $38.8 billion in 2006, a 14.3 percent increase from 2005, according to the latest estimates by Gartner, Inc. Analysts have raised their forecast from their earlier projection in December of 8.6 percent growth in 2006.
"We expect sequential quarterly revenue growth to have returned in the first quarter of 2006, after hitting a low point in the fourth quarter of 2005," said Klaus Rinnen, managing vice president for Gartner's semiconductor manufacturing and design research group.
"The majority of semiconductor manufacturers have and will continue to maintain their investment discipline and invest carefully, although some vendors will be investing strategically in 2006," Mr. Rinnen said. "In the memory segments, we are seeing reported increases in spending plans as second-tier DRAM producers are ramping up capacity aggressively. However, the majority of equipment customers will continue to spend cautiously, releasing orders only when required by end market demand. Seasonal demand patterns will determine equipment spending trends for the near future."
Gartner analysts said the next cyclical peak is expected to occur in 2008, with equipment spending reaching $54.8 billion (see Table 1) before entering into a new downcycle in 2009 and 2010.
Table 1
Worldwide Semiconductor Capital and Equipment Spending Forecasts (Millions of Dollars)
|
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
| Semiconductor Capital Spending |
48,483 |
47,521 |
51,716 |
52,344 |
70,079 |
64,852 |
59,527 |
| Growth (%) |
63.5 |
-2.0 |
8.8 |
1.2 |
33.9 |
-7.5 |
-8.2 |
| Capital Equipment |
37,925 |
33,937 |
38,779 |
41,791 |
54,756 |
47,727 |
43,223 |
| Growth (%) |
65.7 |
-10.5 |
14.3 |
7.8 |
31.0 |
-12.8 |
-9.4 |
| Wafer Fab Equipment |
28,351 |
25,967 |
28,875 |
29,943 |
40,588 |
36,363 |
34,283 |
| Growth (%) |
69.4 |
-8.4 |
11.2 |
3.7 |
35.5 |
-10.4 |
-5.7 |
| Packaging and Assembly Equipment |
4,783 |
4,197 |
5,028 |
5,648 |
7,064 |
5,704 |
5,095 |
| Growth (%) |
52.7 |
-12.3 |
19.8 |
12.3 |
25.1 |
-19.3 |
-10.7 |
| Automated Test Equipment |
4,790 |
3,773 |
4,875 |
6,200 |
7,105 |
5,660 |
3,845 |
| Growth (%) |
58.5 |
-21.2 |
29.2 |
27.2 |
14.6 |
-20.3 |
-32.1 |
| Other Spending |
10,558 |
13,584 |
12,937 |
10,553 |
15,323 |
17,125 |
16,304 |
| Growth (%) |
56.0 |
28.7 |
-4.8 |
-18.4 |
45.2 |
11.8 |
-4.8 |
Source: Gartner Dataquest (April 2006)
Worldwide wafer fab equipment spending is projected to reach 28.9 billion in 2006, an 11.2 percent increase from last year. The wafer fab equipment market will be driven by increased capital expenditure (CapEx) budgets which have risen significantly since Gartner's previous forecast report. Since December, the announced CapEx plans for the top 20 semiconductor manufacturers have increased by nearly $6.3 billion. Of that amount, approximately $4 billion is attributable to memory manufacturers who are responding to increased demand for DRAM and NAND Flash devices.
"Back end capacity is relatively tight, mainly due to raw material issues and the pending Restriction of Hazardous Substances and Waste Electrical and Electronic Equipment environmental regulations. The industry continues its transition to advanced packaging schemes such as quad flat no lead, system-in-a-package, flip-chip, and three-dimensional [stacked] die," Mr. Rinnen said. "Substrate capacity has also become very tight, especially for BGA, flip chip and CSP packages. Utilization rates for the overall industry continued to be around 90 percent during the first quarter, and as demand increases for the rest of 2006, utilization rates will be over the 90 percent mark."
The packaging and assembly equipment (PAE) market is forecast to increase 19.8 percent, with worldwide spending surpassing $5 billion in 2006. On a regional basis, Asia/Pacific will increase its dominance for PAE demand in the next five years. Rising from about 67 percent of PAE shipments in 2005, Asia/Pacific will account for more than 75 percent of all PAE by 2009.
The automated test equipment (ATE) market is expected to rebound from a 21 percent decline in 2005 to an increase of 29.2 percent in 2006. The current rise in ATE sales is primarily driven by increasing capacity requirements for testers for SOC and memory, especially flash. "Expanding demand for these semiconductor devices, coupled with the trend toward further outsourcing of test to SATS companies, is sparking the latest ATE market growth cycle," Mr. Rinnen said.
Additional information is available in the Gartner report "Semiconductor Capital Equipment Demand to Rise in 2006." The report is available on Gartner's Web site here.
This research is produced by Gartner Dataquest's Semiconductors Manufacturing and Design program. This research program, which is part of the overall semiconductor research group, provides a comprehensive view of the entire semiconductor industry, from manufacturing and design to device and application market trends. More information on Gartner's semiconductor research can be found in the Gartner Semiconductor Focus Area here.
CONTACTS:
Christy Pettey
(408) 468-8312
christy.pettey@gartner.com
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About Gartner:
Gartner, Inc. (NYSE: IT) delivers the technology-related insight necessary for its clients to make the right decisions, every day. Gartner serves 10,000 organizations, including chief information officers and other senior IT executives in corporations and government agencies, as well as technology companies and the investment community. The Company consists of Gartner Research, Gartner Executive Programs, Gartner Consulting and Gartner Events. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, U.S.A., and has 3,700 associates, including 1,200 research analysts and consultants in 75 countries worldwide. For more information, visit www.gartner.com.
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