Gartner : Wafer Fab Equipment Spending To Decline
The market is not expected to return to positive growth until 2014
Worldwide wafer fab equipment (WFE) spending is set to total $31.4 billion in 2012, a decline of 13.3 percent from 2011 spending of $36.2 billion, according to Gartner, Inc.
While the market will improve in 2013, it is anticipated to not return to positive growth until the following year. In 2013, Gartner projects WFE spending to total $31.2 billion, a 0.8 percent decline from 2012. The market research firm also says in 2014 the market will hopefully return to growth and increase 15.3 percent to surpass $35.9 billion.
"The outlook for semiconductor equipment markets has deteriorated as the macro economy has weakened," says Bob Johnson, research vice president at Gartner. "WFE started off the year strong, as foundries and other logic manufacturers ramped up sub30nm production. However, demand for new equipment logic production will soften as yields improve, leading to declining shipment volumes for the rest of the year."
Gartner says wafer fab manufacturing capacity utilisation will decline into the low 80 percent range by the end of 2012 before slowly increasing to about 87 percent by the end of 2013. Leading-edge utilisation will return to the high 80 percent range by the second half of 2012, and move into the low 90 percent range through 2013, providing for a somewhat positive capital investment environment.
"Although a period of inventory correction, which led to lowered production levels, appears to be over, overall market weakness is continuing to depress utilisation levels," comments Johnson.
"Increased demand, combined with less than mature yields at the leading edge, is creating shortages at the leading edge for logic, but that is not enough to bring total utilisation levels up to desired levels. In the memory segment, some suppliers are even cutting production in an attempt to shore up weak market fundamentals."
Gartner believes that memory will continue to be weak through 2012, with strong declines in DRAM investments and a virtually flat NAND market. Looking beyond 2012, analysts foresee a modest growth pattern, with normal, but relatively benign, cyclical fluctuations as the industry returns to mid-single-digit growth in device revenue, and capital investment responds accordingly.
Foundry capital spending has been revised downward for 2012 and 2013 due to an earlier yield improvement on 28 nm technology achieved by some foundries and a higher downside risk of wafer demand in the fourth quarter of 2012 and first quarter of 2013. However, foundry capital expenditure (capex) is revised upward for future years due to the more aggressive development schedule of extreme ultraviolet (EUV) and 450 mm.
Foundries are likely to tighten their short-term capex when they experience a more than 10 percent reduction of the fab utilisation rate later in 2012. Wafer demand will drop for several quarters due to the revised downward semiconductor device outlook and the earlier success on yield improvement of 28 nm low-power polysilicon silicon oxynitride technology achieved by some key foundries, although the yield of 28 nm high-k metal gate remains below normal.
Further information is available in the Gartner report, "Forecast Analysis: Semiconductor Wafer Fab Manufacturing Equipment, Worldwide, 3Q12 Update," which is accessible from the firm's website.
