Struggling to keep pace with pent-up IC demand dynamics has forced Gartner to once again revise upwards its capital spending projections for 2010. With the foundries rapidly ramping 40.45nm production, while both NAND flash and DRAM manufacturers transition to 3x node technologies on the back of strong demand, Gartner expects the wafer fabrication equipment (WFE) segment will increase 113.3% in 2010, followed by 7.2% growth in 2011, as supply/demand dynamics return to more-normal levels. Gartner also noted that the slowing growth in spending is also due to the need for new fab announcements for additional capacity, which have yet to seen across multiple market sectors.
"The drive to new technology nodes will drive semiconductor equipment growth in 2010," said Klaus Rinnen, Managing Vice President at Gartner. "The demand for 4nm and 45nm devices is now ramping up, resulting in heavy foundry-based capital spending. Investment at the 3x node by Intel, an increase in spending by NAND memory producers, and the transition to the next generation DDR3 DRAM memory are the key investment growth drivers."
"We could see a slight slowing in orders as 2010 ends, and the industry focuses on macroeconomic conditions. We expect capital equipment growth to continue through 2011, but at a reduced rate, as spending responds to slower growth in the semiconductor markets," noted Rinnen.
Gartner predicts that the packaging and assembly equipment (PAE) segment will increase 104.7% in 2010 and grow a nominal 0.7% in 2011. The sector declined 32% in 2009.
Demand for equipment for advanced processes, such as wafer-level packaging, 3D processes and TSV manufacturing, is expected to grow faster than the overall market. Inspection and process control tools for these advanced packages will also grow above the market rate, according to Gartner.
The worldwide automated test equipment (ATE) market is expected to grow by more than 133% in 2010. The ATE market bottomed in the first quarter of 2009. Growth has accelerated through the first quarter of this year and is expected to make sizeable gains through the third quarter, bringing the overall test market its first growth year since 2006, Gartner noted.
While the ATE market will grow substantially this year, it fell to very low levels last year, with the memory test segment declining below the US$200 million mark.
"For 2010, the semiconductor equipment industry will experience exceptionally strong growth, as we emerge from a very costly and deep recession," said Mr. Rinnen. "Given this exceptional growth, there is a possibility that the honeymoon could end in 2011, which may help to mitigate the boom/bust scenario typical of previous cycles. However, if capacity expansion continues unchecked, a more severe and premature down cycle could occur in 2013. How quickly memory producers react as the market softens and average selling prices (ASPs) decline will likely determine if the market can avoid the massive drops of recent years."