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Dead cats don‚??t bounce

03 October 2008 | By Mark Osborne | Editor's Blog

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Dead cats don’t bounce Barely two months after releasing unrealistic capital spending projections for 2009, SEMI have slipped out news that 2009 doesn’t look like it's going to be bright as once (just) thought. I noted in this blog that things were worse than being painted by SEMI and that the memory manufacturers would remain cautious on spending until the mess they have created is sorted out.

According to SEMI, capital spending is now expected to be at best 10 percent better than in 2008 and at worse 5 percent down on this year. Nice to see SEMI acknowledging that dead cats don’t bounce!

That’s a big change from 20 percent up for 09 in August’s press release and a wide data range that says to me they really don’t know yet what the spending will be in 2009. Not much help really is it?

I am also concerned about SEMI’s ‘fab watch’ forecast for 2009. Although the numbers of new fabs projected for 2009 had a good degree of independent verification when Mike Splinter commented on Applied tracking a lot of potential fab activity. But the ‘tracking’ doesn’t mean these fabs move off the drawing board, or have tool install schedules dusted down and handed out.

When you consider a large number of the proposed fabs are for memory manufacturers, then I wouldn’t be so bullish. Indeed, the news that Micron will keep tool install on hold at its new Singapore fab until at least the 3Q09 is a case in point. In one quick moment you can knock off $2 billion in CapEx spending projections for '09.

As Steve Appleton, Chairman and CEO of Micron, reiterated in a conference call this week, the memory manufacturers are in ‘spreadsheet preservation’ mode and noted that ‘cash is king’ right now. Not the time then for new fab expansions.

It is good to see that SEMI is getting more cautious in its projections as it has been on another planet compared to the rest of us over industry forecasts in recent years. Having retreated significantly from its 20 percent rebound for 2009, it has also said that conditions will improve in the second half of the year, recognising that little is going to change from today’s position for some time.

Tool installs on hold, fabs shuttered and new construction postponed

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Reader comments

I am not sure what to make out of your Blog. As I remember these fab database reports were the first ones back in October 2007 (October 2007 report) reporting a 10 decline on money spent on fabs equipping for 2008 when no one else did. These reports are out there since about 15 years and are one of the best databases. The trends are based on extensive data research down to the fab level. Remember, begin of August, most predicted positive growth rates for equipment spending and some still do. No one expected how the market will look like just two month later. Now, these are unusual times and many companies take unusual measures. I am sure that they are very much aware of any development and heard that they plan to issue interim reports to their customers.
By Still happy on 07 October 2008

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