Gartner Says Semiconductor Capital Equipment Spending Outlook Remains Positive in 2003
SAN JOSE, Calif., April 14, 2003 — Even with the semiconductor industry and its customers in a holding pattern during the first quarter of 2003, the outlook for worldwide semiconductor capital spending, wafer fab equipment, and packaging and assembly equipment spending remains positive for 2003, according to Gartner, Inc. (NYSE: IT and ITB).
Worldwide semiconductor capital spending is projected to grow 7.2 percent in 2003 to $30 billion, up from $27.8 billion in 2002 (see Table 1). Worldwide wafer fab equipment spending is expected to total $17.5 billion, a 8.4 percent increase from 2002 revenue of $16.1 billion. Packaging and assembly equipment is forecast to grow 21.4 percent to $2.8 billion, up from $2.3 billion in 2002.
"Spending in 2003 will most likely be driven by a reduction of the high degree of uncertainty in the business climate," said Jim Hines, principal analyst for Gartner. "This will allow for calculated business planning and, consequently, allow companies to move away from worst-case preparedness toward calculated risk taking."
Table 1
Worldwide Capital and Equipment Spending Forecasts Estimates (Millions of Dollars)
2002
2003
2004
Semiconductor Capital Spending
27,884
29,896
41,525
Growth (%)
-37.4
7.2
38.9
Capital Equipment (Excluding Test)
18,499
20,364
28,509
Growth (%)
-30.6
10.1
40.0
Wafer Fab Equipment
16,155
17,519
24,620
Growth (%)
-31.7
8.4
40.5
Packaging and Assembly Equipment
2,344
2,845
3,890
Growth (%)
-21.6
21.4
36.7
Source: Gartner Dataquest (April 2003)
After showing some improvement last year, fab utilization worldwide saw some slide back in the first quarter of 2003. In the first half of the year, slow demand growth will be matched by marginal increases in capacity and more fab closures, which will tend to keep overall utilization rates flat.
"In the second half of 2003, utilization rates are expected to rise, ending the year at a projected 90 percent, up from about 75 percent right now," said Dean Freeman, principal analyst for Gartner. "The speed at which we approach this threshold and the strength of follow on demand will determine spending in the second half of this year and onward."
Advanced packaging has been growing significantly in the past year, and capacity has been tightening, allowing the packaging and assembly equipment market to finally return to growth in 2003.
"The rapid adoption of the lead frame-based leadless packages is of additional significance. These quad flatpack, no leads (QFN), small outline, no leads (SON) and bumpless chip carrier (BCC) variations of chip-scale packages are experiencing the fastest ramp-up rate of any package previously introduced into the industry," said Jim Walker, principal analyst for Gartner. "Wireless and portable products are adopting these as replacements for the larger, more mature small outline integrated circuit family of packages."
Gartner analysts said that the semiconductor market is significantly underinvested, and while there is the absence of a driving killer application to incite spending, there are many areas that are ripe for improvement in 2003. "With fundamentals improved, and uncertainty lifting, a road is gradually emerging for a renewed expansion of the industry," said Hines.
Additional information is available in the Gartner Dataquest Alert "Semiconductor Capital Equipment Outlook Still Positive for 2Q03." This report examines current market conditions, as well as the new drivers and inhibitors for the industry going into 2003.
This research is produced by Gartner Dataquest's Semiconductors Electronic Manufacturing Worldwide Cluster Research. This research is designed to help companies focus on opportunities in semiconductor manufacturing and procurement covering the entire value chain of services, equipment and materials on through to the procurement of chips. More information about Gartner's semiconductor programs and reports can be found in the Gartner Semiconductor Focus Area at http://www.gartner.com/semiconductor-mkt. To subscribe to this service, please call 408-468-8000. Reports can be purchased on the Internet at www.gartner.com.
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