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2013 tool spending to see drastic drop off, says exec

Posted: 21 Nov 2012 ?? ?Print Version ?Bookmark and Share

Keywords:fab tool spending? foundry spending? memory chip market?

Chip equipment vendor Applied Materials expects fab tool spending to decline 5-15 per cent next year, worse than Gartner's forecast.

According to Applied Materials Inc., semiconductor equipment spending is expected to decline by 5 to 15 per cent in 2013. The company is projecting a much steeper decline than prediction of market research firm Gartner Inc.

Michael Splinter, Applied's chairman and CEO, said in a conference call following Applied's most recent quarterly report last week that the firm expects wafer fab equipment spending to decline for a second consecutive year based on an anticipated pullback in logic and foundry spending and continued weakness in the memory chip market.

Applied's quarterly sales and profit beat expectations, but its forecast for the current quarter fell short of analysts' estimates.

Applied said it expects wafer fab equipment spending to be between $30 billion and $32 billion this year, falling to between $26 billion and $30 billion next year.

Michael Splinter

Michael Splinter

Gartner said last month it expects chip equipment sales to�decline about 1 per cent next year.�The market research firm estimated that fab tool sales will be about $31.4 billion this year, down 13 per cent from 2011.

"We think foundry and logic spending are going to be down modestly next year, kind of in that 10 per cent range," Splinter said. "And then memory spending is pretty much going to be flattish at the low level of 25 to 30 per cent of overall wafer fab equipment spending."

Earlier this year, strong spending on 28-nm capacity by foundries was�keeping Applied and other equipment vendors in the black. But Applied reported in October that�foundries were pulling back on spending dramatically.

Outlook clouded
Splinter said Applied expects logic chip makers to increase spending in the first half of 2013 as foundry spending declines. But the outlook for the second half of next year is clouded, he said.

"When we look at wafer fab equipment spending for all of '13, it's a little bit hard to tell right now what the second half will look like," Splinter said. "I really think the big part of that is how the macro environment plays out, economic environment plays out and, more specifically, how well PCs do in that environment because that could stoke spending, both on logic and DRAM for the second half."

Applied reported sales of $1.65 billion for its fiscal fourth quarter, which closed Oct.28, down 29 per cent from the previous quarter and down 24 per cent compared with the fourth quarter of fiscal 2011. The company report a net loss of $515 million, or 42 cents per share, for the quarter, compared to a net income of $322 million in the previous quarter and a net income of $361 million in the year-ago quarter.

For the fiscal year, Applied reported sales of $8.04 billion, down 21 per cent from fiscal 2011. The company report a net income of $109 million or 9 cents per share for the year, down from a net income of $1.93 billion or $1.45 per share in fiscal 2011.

Applied said it expects fiscal first quarter sales to be between 1.4 billion and $1.65 billion, flat to down 15 per cent sequentially.

"Soft macroeconomic conditions, combined with the timing of Windows 8, resulted in subdued back-to-school PC sales, and we expect negative PC growth for the calendar year," Splinter said. "As a result, we are tempering our expectations for logic spending in 2013. However, the release of new touch-enabled ultrabooks, hence for PC growth, providing a potential upside for both logic and DRAM investment."

- Dylan McGrath
??EE Times

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