Global economic squeeze leads 26-per cent decline in 2008 semiconductor capital equipment spending
10 Oct 2008
A collapse in memory spending, combined with a weak economy, is driving a major contraction in semiconductor capital equipment spending in 2008, according to Gartner, Inc. The slowdown is expected to continue into 2009 before the industry recovers in 2010.
Worldwide semiconductor capital equipment spending is on pace to total $47.1 billion in 2008, a 25.7 per cent decline from 2007 (see Table 1). In 2009, spending is expected to decline another 12.8 per cent and return to growth in 2010. These projections are down from Gartner's July forecast of a 19.8 per cent decline in spending for 2008.
''The excess spending of 2006 and 2007 has hit home in 2008, as the semiconductor equipment industry will continue to feel the pinch well into 2009,'' said Dean Freeman, research vice president for Gartner's semiconductor manufacturing group.
Freeman explains, ''The oversupply in the memory sector and a slowdown in consumer spending due to the economic crisis in most of the G8 (Canada, France, Germany, Italy, Japan, Russia, the UK and the US) economies are having an impact on consumer electronic consumption, which in turn impacts foundry and integrated device manufacturer (IDM) spending.''
Table 1
| Worldwide Semiconductor Capital and Equipment Spending Forecasts (Millions of Dollars) | ||||||
| 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | |
| Semiconductor Capital Spending | 63,400.6 | 47,108.9 | 41,062.6 | 47,938.30 | 59,032.1 | 52,806.1 |
| Growth (%) | 5.5 | -25.7 | -12.8 | 16.7 | 23.1 | -10.5 |
| Capital Equipment | 44,743.4 | 33,463.0 | 30,476.2 | 36,463.70 | 42,407.6 | 40,229.7 |
| Growth (%) | 6.4 | -25.2 | -8.9 | 19.6 | 16.3 | -5.1 |
| Wafer Fab Equipment | 36,004.6 | 26,605.1 | 23,446.5 | 27,503.00 | 34,426.6 | 30,958.2 |
| Growth (%) | 10.6 | -26.1 | -11.9 | 17.3 | 25.2 | -10.1 |
| Packaging and Assembly Equipment | 5,182.3 | 4,250.5 | 4,292.6 | 5,418.70 | 4,769.2 | 5,490.6 |
| Growth (%) | -3.7 | -18 | 1 | 26.2 | -12 | 15.1 |
| Automated Test Equipment | 3,556.5 | 2,607.4 | 2,737.2 | 3,542.00 | 3,211.9 | 3,780.9 |
| Growth (%) | -13.7 | -26.7 | 5 | 29.4 | -9.3 | 17.7 |
| Other Spending | 18,657.2 | 13,645.9 | 10,586.3 | 11,474.60 | 16,624.5 | 12,576.4 |
| Growth (%) | 3.5 | -26.9 | -22.4 | 8.4 | 44.9 | -24.4 |
| Source: Gartner (October 2008) | ||||||
Worldwide wafer fab equipment spending is forecast to decline 26.1 per cent in 2008. Lithography remains the strongest segment, with only a 15 per cent revenue decline expected as the increased adoption of 193 immersion continues to take more share than older technologies. These advanced tools are required by memory manufacturers that are aggressively adopting smaller geometries to drive costs down, even if they have dramatically slowed the rate of capacity expansion. We anticipate the 193 immersion adoption to continue to drive performance of the stepper segment in 2009.
Worldwide packaging and assembly equipment (PAE) spending is expected to fall 18 percent in 2008. The PAE market has softened since Gartner's last update in July. On a regional basis, Asia/Pacific will increase its share of PAE consumption through Gartner's forecast period. From just under 71 percent of PAE shipments in 2007, Asia/Pacific will account for more than 76 percent of all PAE sales by 2012.
The worldwide automated test equipment (ATE) market is projected to decline nearly 27 per cent. Currently, the market for memory testers is very soft and is likely to remain weaker than the general market through 2009. The system-on-chip, analog and radio frequency test markets will outperform the general ATE market through next year. In the next several years, the memory test market will be a closely watched segment because there will be growing competition in that space.
