Despite overcapacity in key markets such as DRAM, wafer fab equipment spending is projected to be above US$30 billion in 2012, according to Applied Materials. Mike Splinter said in a conference call to discuss quarterly results last week that FEOL capital spending in 2011 actually exceeded its previous forecast, ending the year at approximately US$35 billion. Spending on lithography equipment were said to reached record highs as memory makers implemented device shrinks by upgrading lines with 193 ArF immersion systems.
Splinter noted that sales for Applied in 2011 had been strong in the inspection, transistor, deposition and electroplating businesses.
The executive also noted in his prepared remarks that Applied was currently estimating spending to be in the range of US$30-US$35 billion this year, flat to down 15%.
According to the executive, the ‘mobility’ trend was driving growth and in the fourth calendar quarter, smartphone unit sales were said to have surpassed PCs for the first time, with an expectation that 600 million to 700 million smart phones would be sold in 2012, an increase of 35% year-on-year.
“Smartphones and tablets are driving demand for application processors and as these processors become increasingly sophisticated, we are seeing a significant increase in die sizes. As a result, foundries are aggressively investing as they ramp production at the 3x and 2x nodes,” noted Splinter in the call.
Adding, “Applied is favorably exposed to foundry investment. In our first quarter, we saw 75% increase in revenue from these customers and expect sequential growth of over 40% in our second quarter, driven by record quarterly sales in our front-end products, metal deposition products and implant.”
However, the record increase in spending for lithography equipment actually goes against Applied as it doesn’t offer direct litho equipment.
“That spending shift basically on a percentage basis, shrinks our TAM or shrinks our SAM. So we saw a 2- to 3-point downward shift because of that during 2011, primarily -- and that was -- caused a lot of line upgrades, also in logic, a big shift to immersion lithography.”
But Applied did claim to gain market share in 2011 in the areas of ECP, claiming it gained double digits last year. In metal deposition, in CVD and inspection, the company also claimed market share gains. However, it lost market share in CMP and etch, though management claimed it had a good chance to bounce back in 2012, though didn’t provide specifics on how that would happen.