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A slow down in capital spending that started in 2007 and virtually came to a halt in the second-half of 2008, had little affect on the semiconductor materials market as revenues reached US$42.7 billion in 2008, setting a new record, according to the latest report form SEMI. IC manufacturing growth in China and the Rest of World (ROW) region contributed to the revenue increase. However, material price increases for Gold in particular helped boost figures to new highs.

The wafer fabrication materials and packaging materials were US$24.1 billion and US$18.6 billion, respectively. Comparable revenues for these segments in 2007 were US$25.1 billion for wafer fabrication materials and US$17.5 billion for packaging materials. 

Japan continued to be the largest consumer of semiconductor materials, increasing its share from 22% in 2007 to 24% in 2008. However, currency conversion contributed to the year-over-year revenue growth, SEMI said.

Europe, North America, Korea and Taiwan saw material consumption decline in 2008, compared with 2007. The reductions seen in Korea and Taiwan could have been due to the cuts in production of memory ICs and the considerable drop in fab utilization rates at the major foundries in Taiwan. Both Europe and North America have seen little production capacity added in 2007 and 2008 to compensate for the closure of older 200mm fabs during this period.

Capital spending is expected to reach a new low in 2009 and utilization rates not recover until the second-half of the year, could result in a significant fall in material consumption and revenues compared to previous years.