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The usual suspects of slowing global economic growth and excess inventory have set the backdrop for Gartner to completely revise is 5-year CapEx forecast for the semiconductor industry. The slowdown in spending has already started and will decline by 19.2% in 2012 with equipment spending expected to total US$35.2 billion in 2012. Overall capital spending will decline 16.7% next year to US$51.5 billion, down from US$61.8 billion in 2011.

"The slowdown appears to be across the board. While it appears the foundries will continue their capacity race at 28nm, spending on 45 to 90 nm technologies is slowing, and some equipment from those technology nodes is being used for 28 nm production to help increase capacity utilization," commented Klaus Rinnen, managing vice president at Gartner. "Due to weaker-than-expected growth in the production units of media tablets, NAND spending has softened slightly, as well."

Gartner expects the slowdown to last for the remainder of 2011 and into the first half of 2012.

With supply and demand expected to be in better balance by mid-year, DRAM and foundry will need to begin to increase spending to meet an increase in demand.

However, the next growth year is not expected to materialise until 2013, when capital spending will increase by 18.4%, according to Gartner.

Worldwide wafer fab equipment (WFE) revenue is projected to grow 9.4% in 2011, but decline 19.6% in 2012. The need for leading-edge equipment is benefiting immersion lithography, etch, certain segments in deposition involved in double patterning, and critical leading-edge logic processes.

Leading edge is not the only benefactor of expanding mobile media markets. Analog and discrete devices needed for power management and energy management will drive the need for 200mm equipment, Gartner noted.