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Global IC manufacturing equipment spending to fall in 2013

Posted: 23 Sep 2013 ?? ?Print Version ?Bookmark and Share

Keywords:semiconductor manufacturing equipment? capital spending?

Gartner Inc. has predicted that the worldwide semiconductor manufacturing equipment spending will reach $34.6 billion in 2013, an 8.5 per cent decline from 2012 spending of $37.8 billion. According to the market analytics firm, capital spending will decrease 6.8 per cent in 2013, due to diminishing 28nm investment from a softening in the mobile phone market.

"Weak semiconductor market conditions that continued into 1Q13 generated downward pressure on new equipment purchases," said Dean Freeman, research VP at Gartner. "However, semiconductor equipment quarterly revenue is beginning to improve, and positive movement in the book-to-bill ratio indicated that spending for equipment will pick up in the remainder of 2013. Looking beyond 2013, we expect that the current economic malaise will have worked its way through the industry, and spending will follow a generally increasing pattern in all sectors throughout the rest of the forecast period."

Logic spending has been the key driver of capital spending in 2013. However, a softening in the mobile phone markets has dampened investment in 28nm during Q3, and this is projected to continue into 4Q13. Memory spending has picked up some of the slack and the total spending in 2H13 should outpace 1H13.

Gartner said that capital spending is highly concentrated among a handful of companies. The top three companies (Intel, TSMC and Samsung) account for more than half of 2013 spending. Spending by the top five semiconductor manufacturers exceeds 65 per cent of total 2013 spending, with the top 10 accounting for 76 per cent of the total. 2013 spending will be back-half-loaded, with capacity increases occurring as memory market conditions improve, and Intel prepares for initial 14nm production late in the year.

Gartner predicts that 2014 semiconductor capital spending will increase 14.1 per cent, followed by 13.8 per cent growth in 2015. The next cyclical decline will be a mild drop of 2.8 per cent in 2016, followed by a return to growth in 2017.

"In 2013, the wafer fab equipment (WFE) picture is one of continuous QoQ growth as major manufacturers come out of a period of high inventories and a generally weak semiconductor market," said Freeman. "Early in the year, the book-to-bill ratio passed 1-to-1 for the first time in months, signalling that the need for new equipment is strengthening because demand for leading-edge devices is improving."

Gartner predicted that wafer fab manufacturing capacity utilisation will hover in the high-70 per cent to low-80 per cent range during 1H13 and building to the mid-80 per cent range at the beginning of 2014. Leading-edge utilisation will move into the low-90 per cent range by the end of 2013, providing for a positive capital investment environment.

The capital spending forecast estimates total capital spending from all forms of semiconductor manufacturers, including foundries and back-end assembly and test services companies. This is based on the industry's requirements for new and upgraded facilities to meet the forecast demand for semiconductor production. Capital spending represents the total amount spent by the industry for equipment and new facilities.

The WFE forecast estimates market revenue based on future global sales of the equipment needed to produce the wafers on which semiconductor devices are fabricated. WFE demand is a function of the number of fabs in operation, capacity utilisation, their size and their technology profile.

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