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Gartner lowers capex forecast for '06

Posted: 09 Oct 2006 ?? ?Print Version ?Bookmark and Share

Keywords:Gartner? capex? Mark LaPedus?

Seeing a probable ''correction'' down the road, Gartner Inc. lowered its capital spending outlook for 2006, but slightly raised its forecasts for 2007.

Overall capital spending is projected to hit $54.6 billion this year, up 15.1 percent over 2005, according to Gartner. Capital spending is projected to fall by 0.1 percent in 2007, but it will rebound and grow by 18.4 percent in 2008, the research firm added.

Worldwide capital equipment spending is projected to grow 23.5 percent in 2006, but the industry will soften in 2007 as spending declines 2.7 percent, according to Gartner. The industry will rebound in 2008, as capital equipment spending is forecast to increase by 23.3 percent.

"Semiconductor capital equipment bookings have continued to surge throughout 2006 as semiconductor manufacturers quickly add capacity," said Klaus Rinnen, an analyst with Gartner, in a statement. "However, there are a number of concerns for equipment manufacturers, such as an increasing inventory situation, the strong potential for oversupply in both flash and DRAM if an increase in demand does not materialize, and the delta between equipment spending and semiconductor revenue growth. Combined, these conditions create a scenario that could lead to a slight correction next year."

According to Gartner, total utilization rates will stay in the low-90-percent range throughout 2006, with leading-edge capacity remaining at about 97 percent. However, by 2007, as new capacity comes on line, utilization rates will drop slightly, although they will stay at about 90 percent throughout 2007. This will result in a slowing demand for additional capacity as the industry absorbs the shipments from 2006.

Wafer fab equipment revenue is also expected to grow 24.6 percent in 2006, but 2007 revenue will decline 2.1 percent. Packaging and assembly equipment market is forecast to grow 13.6 percent in 2006, and it will decline 7.4 percent the following year. Meanwhile, automatic test equipment market will grow 27.4 percent in 2006 but will experience a slight decline 1.9 percent next year.

- Mark LaPedus
EE Times

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