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Gartner: Semi equipment capex to fall 12 percent in 2005

Posted: 07 Oct 2005 ?? ?Print Version ?Bookmark and Share

Keywords:gartner? semiconductor equipment? ic equipment? consumer electronics?

Despite strong demand in some consumer electronics segments, global semiconductor capital equipment spending is expected to fall 11.6 percent in 2005, according to market research firm Gartner Inc.

"While end user demand is still strong in some product areas, such as memory capacity in response to surging demand for flash devices, it is not enough to push the equipment market into any significant growth for either 2005 or 2006," said Bob Johnson, research vice president for Gartner's semiconductor manufacturing and design research group, in a statement.

Global wafer fab equipment spending is projected to decline 9.5 percent in 2005. This market is forecast to decline in 2006 as well and return to positive growth in 2007.

As semiconductor manufacturers trimmed production levels in response to excess inventories, utilization rates bottomed in the first quarter of 2005, but will rise to a 2005 peak in the third quarter. But a combination of additional capacity coming online and seasonal production variations will drop utilization rates the fourth quarter of 2005 and the first quarter of 2006.

Burned by capital equipment overspending in the past, equipment makers remain in a cautious mode, which Johnson believes will serve them well in the long run.

"What is encouraging about this down cycle is how rapidly semiconductor manufacturers responded to increasing inventories last year and lowering utilization rates this year," Johnson said. "While new capacity additions are in synch with anticipated demand, end market growth for semiconductors is expected to be modest for the next few years, so we expect a similarly modest up-cycle for equipment."

One bright spot has been the packaging and assembly equipment market. According to Gartner, that sector was forecast in July to fall 16.5 percent, but is now expected to fall 14.9 percent.

Also showing resiliency is the automated test equipment (ATE) market. While Gartner expects that sector to decline 21 percent this year, the firm noted that ATE spending has picked up in the second half of the year.

Gartner expects the ATE market to grow 25 percent in 2006, beginning a recovery that will last several years.

EE Times





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