Semiconductor Industry bottomed in 2009
The outlook for thesemiconductor equipment industry is beginning to improve, as it appears capitalequipment spending has bottomed out in the second quarter of 2009, according toGartner Inc. Analysts predict a gradual improvement on a quarter-by-quarterbasis throughout the rest of the year and into 2010.
The current up-tickin semiconductor sales will not be sufficient to overcome the effects ofindustry-wide overcapacity and low utilisation rates in the short term.Worldwide semiconductor capital equipment spending is on pace to total $24.3billion in 2009, a 44.8 per cent decline from 2008 spending of $44 billion (seeTable 1). In 2010, worldwide capital equipment spending is forecast to reach $29.4billion, a 20.9 per cent increase from 2009.
“The impact of theeconomic crisis has hit the semiconductor equipment industry hard, but signs oflife are returning,” said Klaus Rinnen, managing vice president at Gartner.“Undoubtedly it will be a long, slow road to complete recovery, but we areseeing the first indications of increased foundry activity to replenishinventories depleted by the cutbacks of the past few quarters.”
Worldwide wafer fabequipment spending is expected to decrease 47.1 per cent in 2009, following adrop of nearly 33 per cent in 2008. In 2009, the etch, clean and planarisationsegments will be the largest of the front-end equipment areas, followed bydeposition and then by lithography. Lithography has been hit especially hard bythe downturn as sales for the most advanced 193 nm immersion tools in memoryhave been lukewarm, with capital spending for memory at levels not seen since2002.
After decliningnearly 25 per cent last year, the packaging and assembly equipment (PAE) marketis expected to fall nearly 47 per cent in 2009. A recovery for PAE is likely tobe seen in the second half of this year if recent positive economicdevelopments are sustained.
For 2009, theworldwide automated test equipment (ATE) market is forecast to decline 32 percent. While the test market has waded through a difficult period since 2007, itappears that a bottom is forming in the second quarter of 2009. The ATE marketnow sits at very low market levels, with some test segments very likelyrealizing substantial capacity reductions. As the industry moves toward agrowth phase, the potential for explosive growth in the 2010 and 2011 timeframe could be realised.
Mr Rinnen said thatoverall, the industry has responded as it should when faced with one of theworst downturns in its history — by eliminating all unnecessary spending,cutting purchases to inventories and not doing anything dramatic. Herecommended that for the next few quarters, equipment suppliers focus onquarter-to-quarter growth and let the annual numbers fall where they may.
“Over the past few years, we have seen thesemiconductor and electronics industries implement impressive movements intheir ability to control and manage inventories,” said Mr Rinnen. “It appearsthe industry has learned a painful lesson and can implement improvements on itsability to manage capital investments and capacity and thus bring a return toprofitability to all segments.”
