News Article
Stable 2005 capital spending?
Capital spending by semiconductor companies in 2005 is expected to remain at a similar level to the $45.7 invested in chip equipment in 2004, according to a new study of the world's 46 leading semiconductor makers by market analyst IC Insights.
The company had previously been forecasting a 1 per cent decline in capital spending. Other analysts had project even larger declines.
Looking ahead to 2006, IC Insights believes that semiconductor industry spending will be flat or slightly down from 2005. The mid-year outlook is for a 9 percent decline in capital expenditures in 2006. After sharp swings in quarterly expenditures during the first half of 2005, semiconductor capital spending trends appear to be moderating and holding relatively steady in the final six months of this year. In the first half of 2005, industry capital spending sequentially grew 12 percent in 1Q05, compared to 4Q04, but then plunged 19 percent in 2Q05.
IC Insights estimates that capital spending as a percentage of semiconductor industry sales will be only 19 percent in 3Q05 and 4Q05, down significantly from 25 percent in 1Q05. If worldwide semiconductor revenues grow 5-10 percent in 2006 - as expected - and semiconductor suppliers keep their spending ratio near 19 percent, a flat-to-slightly down spending environment will prevail in 2006.
A breakdown of capital investment by country reveals that European firms are tightening their belts more than any other region. IC Insights is forecasting a 15 percent increase in capital spending by North American device makers in 2005 compared to 2004. Korean semiconductor manufacturers are now planning to increase capital spending by 19 percent in 2005. However, semiconductor companies based in Japan, Europe, and Taiwan are cutting capital spending in 2005 by 7 percent, 18 percent, and 2 percent, respectively.
Planned outlays for worldwide semiconductor capital spending for 2005 now stand at $45.8 billion.
Looking ahead to 2006, IC Insights believes that semiconductor industry spending will be flat or slightly down from 2005. The mid-year outlook is for a 9 percent decline in capital expenditures in 2006. After sharp swings in quarterly expenditures during the first half of 2005, semiconductor capital spending trends appear to be moderating and holding relatively steady in the final six months of this year. In the first half of 2005, industry capital spending sequentially grew 12 percent in 1Q05, compared to 4Q04, but then plunged 19 percent in 2Q05.
IC Insights estimates that capital spending as a percentage of semiconductor industry sales will be only 19 percent in 3Q05 and 4Q05, down significantly from 25 percent in 1Q05. If worldwide semiconductor revenues grow 5-10 percent in 2006 - as expected - and semiconductor suppliers keep their spending ratio near 19 percent, a flat-to-slightly down spending environment will prevail in 2006.
A breakdown of capital investment by country reveals that European firms are tightening their belts more than any other region. IC Insights is forecasting a 15 percent increase in capital spending by North American device makers in 2005 compared to 2004. Korean semiconductor manufacturers are now planning to increase capital spending by 19 percent in 2005. However, semiconductor companies based in Japan, Europe, and Taiwan are cutting capital spending in 2005 by 7 percent, 18 percent, and 2 percent, respectively.
Planned outlays for worldwide semiconductor capital spending for 2005 now stand at $45.8 billion.
