Market research
Capital spending in 2003 of $29.661bn is set to grow to $44.763bn (+50.9%) in 2004 and peak in 2005 at $50.767bn (+13.4%). The period 2006-2008: $43.058bn, $35.693bn, $39.872bn. Capital equipment revenues in 2003 were $22.824bn. This is expected to increase 63.5% in 2004 to $37.317bn and again peak in 2005 at $42.912bn (+15.0%). For 2006-2008: $35.230bn, $27.806bn, $32.439bn. Package and assembly equipment is expected to lead the downturn with growth in 2005 at the 2.4% level.
"The surge in new equipment sales in 2004 is a direct result of demand visibility and capacity tightness," says Klaus Rinnen, vice-president for Gartner's semiconductor manufacturing and design research group. "However, now that capacity increases are keeping pace with unit demand, equipment orders are slowing. It seems the industry is attempting to more closely match its supply and demand ramps to maximise much-needed profits."
The regional distribution of spending is estimated at 44% for Asia-Pacific, 23% for the Americas, 21% for Japan and 12% for Europe and the Middle East.
Market researcher Advanced Forecasting points to announcements made last year that the long-term growth of the semiconductor industry would fade to 4-8% as being a bit premature. According to Advanced Forecasting, the long-term growth rate for the semiconductor industry has not undergone a significant structural change in the last few years.
Using a twelve-year moving average of annual growth rates for global IC revenues, the historical average had been declining slowly since 1997, hovering in the 15-19% range until 2000. While the 2001 recession caused the average to drop to 12%, it has been recovering ever since and is projected to reach 14% in 2004.
"The semiconductor industry is a maturing industry and we should expect that its average annual growth rate will trend in a downward direction, but the decline will be very gradual, not a step function as industry pundits have indicated," says Rosa Luis, director of Marketing and Sales for Advanced Forecasting. "Other forecasters have claimed that the industry would experience a dramatic change from the historical growth rate, but our research shows that no significant change has occurred."
Dr Moshe Handelsman, founder of Advanced Forecasting, comments:
"Extrapolations based on the depressed state-of-mind during and following the 2001 recession created the impression that the semiconductor industry would cease to show future growth potential."
Advanced Forecasting's analysis of the average annual growth rate was conducted using historical data back to 1986. An estimated growth rate of 33% for 2004 was used to complete the analysis. Some forecasting institutions have recently increased their annual growth rate predictions for 2004 past the 30% mark. Advanced Forecasting reports that it has been saying that 2004 IC revenues would increase more than 30% over 2003 for more than six months.
