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World semiconductor capital equipment spend flat in 2007, strong rebound in 2008 |
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Dec 21, 2006 at 11:24 AM |
 Market researcher Gartner believes worldwide semiconductor capital equipment spending will be flat in 2007 compared with this year and will rebound with double-digit percentage growth in 2008. In 2006, worldwide semiconductor capital equipment spending grew 24.9% to $42.4 billion, according to Gartner's figures.
However, the market will go through a year of readjustment with revenue
declining 0.7% to $42.1 billion in 2007, according to Gartner. Since
forecasters frequently get their figures wrong by more than ten
percentage points, this forecast decline is, for all intents and
purposes, "flat". Gartner looks beyond next year to 2008 when the
market is projected to return to strong growth with worldwide spending
increasing 20.8% to $50.8 billion.
"In 2006, slowing logic-related demand from integrated device manufacturers (IDMs) and foundries alike was offset by strong commodity memory investments, resulting in healthy growth for the semiconductor capital equipment industry," said Klaus Rinnen, managing vice president for Gartner's semiconductor manufacturing and design research group. "In 2007, a softer macroeconomic sales environment for electronics combined with excess semiconductor inventories and strong 2006 capacity investments will cause a small contraction in equipment demand in 2007, but it will not be a collapse in demand."
Gartner splits the market into wafer fab, package & assembly and test. For wafer fab equipment, a nearly flat year in 2007 is projected with 0.6% "growth" to $33.0 billion, down from the 26.3% increase to $32.8 billion of 2006. Gartner is projecting a market contraction for packaging and assembly equipment (PAE) of 5.7% in 2007, and a contraction of 5% for automated test equipment (ATE).
Strong spending in memory allowed the wafer fab equipment market to continue sailing along in 2006, although first signs of the slowdown hit in the fourth quarter as push-outs by several key memory manufacturers occurred, according to Gartner. At this time, these push-outs appear to be temporary, while supply adjusts to demand. Gartner expects segments associated with leading-edge technology to be "hot" because new equipment will be needed to facilitate 65 and 45nm technology introductions.
After peaking around the middle of 2006, semiconductor assembly and test services (SATS) providers have become more cautious concerning market conditions. ‘Wait and see' is the dominant market view as 2006 ends. Like the PAE portion of the back-end manufacturing supply chain, the ATE segment experienced a healthy growth surge during the first half of this year. However, that growth has now stagnated. Despite a solid first half of 2006, there has recently been a weakening in orders. The market has not severely eroded, but ATE sales are expected to be down in 2007.
"The driver of investments in 2007 is a combination of a revival of logic-related capacity investment as the year progresses and continued strength in commodity memory," Rinnen says. "In fact, our current statistics show that memory spending could potentially reach a new high, accounting for 50% of total capital spending. And therein lays the biggest risk and volatility for 2007."
Table: Worldwide semiconductor capital and equipment spending forecasts
(billions of dollars). Source: Gartner Dataquest, December 2006.
By Dr Mike Cooke
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