Fab tool makers losing steam

"Our proprietary global leading indicators had turned down," said Robert Castellano, president of The Information Network, in a statement. "The hyper-growth already exhibited through 1H 2010 cannot be sustained because the poor macroeconomic climate could not support 100 percent-plus equipment growth. Pushouts will dramatically affect the lithography sector which has been riding a wave of stellar levels of purchases primarily from Samsung."

While the overall front-end market will suffer pushouts, the lithography sector will be impacted most, where sales of $35 million immersion DUV tools have flooded the market of late.

"2010 is becoming very reminiscent of 2000, where poor inventory control, fear of IC shortages, and concern over long waiting times for leading-edge equipment spelled disaster, and we ended the year with $10 billion in excess IC capacity and a shattered equipment industry that took years to claw out of the red and has never fully recovered until this year," added Castellano. "Forecasts for the semiconductor and equipment industries seem to get bigger with each monthly announcement, and the fragile economies of the Western world do not warrant such growth."

''Increasing inventories at some of the biggest foundry customers have raised fears about the future revenue growth,'' according to VLSI Research Inc. ''Sales of the top fabless suppliers jumped 4.5 percent in Q2, closely matching Q1 growth. Meanwhile, inventories rose 11 percent in Q2, following a 13 percent jump in Q1. More importantly, inventory-to-sales ratio for the top fabless suppliers jumped to 24.6 percent in Q2, compared to 23.1 percent in the previous quarter. By historical standards, this ratio is still relatively healthy, but it could spell trouble for the industry if it continues to grow at these rates in the coming quarters.''

- EE Times