Economic data does not drive equipment revenues
The business climate for the semiconductor equipment industry is being undermined by semiconductor manufacturers, not the economy, according to the report “The Global Market for Equipment and Materials for IC Manufacturing,” recently published by The Information Network. It is widely known that semiconductor revenues coordinate well with GDP. If economic conditions are favourable in a region or globally, consumers will have the resources to purchase items that contain semiconductors, whether they be PCs, cell phones, or automobiles.
One would think that there would be a correlation between semiconductor sales and equipment purchases, as more and newer equipment would be purchased to manufacture the additional semiconductors. Historically there has been this correlation until the downturn in the industry in 2001. One of the major culprits has been the move to 300mm wafers, which as we wrote previously in press releases back in April 2009, utilize half the amount of equipment to process the same number of chips because of the two-times increase in silicon real estate on a 300mm silicon wafer compared to a 200mm wafer.
As the Great Recession has decreased in intensity, our proprietary leading indicators have been moving up since they turned in March 2009. As shown below, semiconductor revenues have followed since the inflection in March. If we take a look at a similar comparison between our proprietary leading indicators and semiconductor equipment, we see that the inflection point for equipment did not occur until May 2009, but more importantly, equipment revenues have not tracked our leading indicator curve.
There have been forecasts of late pointing to 50%+ growth in the semiconductor equipment market in 2010. Unless a paradigm shift occurs in semiconductor buying strategies, those numbers will be far off the mark.
