Capital spending to recover in 2H 09

Semiconductor capital spending is expected to drop for the second consecutive year, but look for a "turning point" in expenditures sooner than later, according to market research firm IC Insights Inc.

Overall, IC Insights has lowered its IC capital spending forecast. It is projected that capital spending will hit $26.6 billion in 2009, down 39 percent over 2008. In 2008, capital spending reached $43.9 billion, down 28 percent over 2007, according to the firm. In 2007, capital spending hit $60.9 billion.

In January, IC Insights projected that capital spending would hit $32.4 billion in 2009, down 30 percent over 2008. Now, for the good news: "IC Insights believes that the turning point in capital spending, on a quarterly basis, is expected to coincide with a firming of IC ASPs beginning in Q2 09," according to the firm.

Spurred by pent-up electronic system demand and increasing average selling prices (ASPs), the IC market will register double-digit growth in 2010 and 2011 after beginning to recover in the second half of this year, according to market research firm IC Insights.

On a q-on-q r basis, capital spending is projected to hit $5.8 billion in Q1 09, $5.9 billion in Q2, $6.8 billion in Q3 and $8.1 billion in Q4, according to the firm.

1999-2013 Worldwide capital spending trends (Click on image to enlarge.)

Another positive trend: After a two-year, double-digit decline in capital spending, the following year showed a double-digit increase, according to recent trends. So for 2010, capital spending is projected to hit $30.6 billion, up 15 percent, the firm said.

The bad news: That's below the level in recent cycles, including 1999, when capital spending was $33.2 billion, it was noted.

- Mark LaPedus
EE Times