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Will the fab-tool market recover in 2009?

Posted: 14 Jul 2008     Print Version  Bookmark and Share

Keywords:IC industry  capital spending  DRAM  semiconductor capital equipment 

It's official: The IC-equipment market is in a downturn right now. But will the fab-tool market recover in 2009?

Despite a downturn in the IC industry, Gartner Inc. has once again lowered its capital spending forecasts for 2008. Capital spending—and the fab equipment markets—are expected to decline even more than originally thought in 2008.

On the bright side, Gartner sees a recovery in 2009. But the 2008 numbers are far worse than Gartner's last forecast in December—and updated figures in April.

Gartner's updated forecast reflects ''significant oversupply'' conditions in the DRAM and NAND flash memory segments. Worldwide memory spending is expected to decline 32.1 per cent, with DRAM down 40.5 per cent and NAND flash down 19 per cent.

Overall capital spending is projected to fall by 22.4 per cent in 2008, compared to minus 19.8 per cent in the previous forecast, according to Gartner.

Worldwide semiconductor capital equipment spending is projected to fall 20.6 per cent, according to Gartner (Stamford, Conn.). In the previous forecast, worldwide semiconductor capital equipment was expected to fall 17.4 per cent.

In December, Gartner originally predicted that overall capital spending would drop 13.2 per cent. At that time, the research firm said equipment spending would drop 9.9 per cent.

''The anticipated bursting of the capital spending bubble in memory markets, combined with continued uncertainty in the global economic picture, drives the semiconductor capital equipment markets into contraction in 2008,'' according to a new report from Gartner. ''All segments are reporting decreased spending plans, and there is little upside potential currently visible for the near term. Our most likely scenario has spending growth returning in 2009.''

''The next six to 12 months will be another period of uncertainty and risks for the semiconductor manufacturing and equipment industries,'' said Klaus Rinnen, managing vice president for Gartner's semiconductor manufacturing group, in a statement.

''The bursting of the DRAM spending bubble should come as a surprise to no one; the fact that it coincides with downward economic pressures and the uncertain impact on semiconductor demand adds significant risk to an already grim forecast for capital equipment,'' he said.

The outlook, however, appears to be somewhat mixed. ''We are still forecasting a capital spending recovery in 2009, as the oversupply of DRAM capacity is resolved,'' according to Gartner. ''However, we have reduced our expectations for capital spending growth because the latest global economic forecasts show lingering concerns, causing expectations to be slightly below those for 2008. Semiconductor capital spending should grow 7.6 per cent in our most likely scenario, which would drive growth in all the equipment segments. However, this forecast is not without risks.''

Looking beyond 2009, Gartner sees an 18.2 per cent capital spending increase in 2010. 2011 will see the next decline of 9.4 per cent, followed by 7 per cent growth in 2012.

Here are some key findings in the report:

*The wafer fab equipment (WFE) segment will decline 21.5 per cent in 2008.

*The packaging and assembly equipment (PAE) segment will decline 15.2 per cent in 2008.

*The automated test equipment (ATE) segment will decline 20.3 per cent in 2008.

Hot, cold markets

What are the hot and cold equipment markets for 2008?Answer: Every market is cold, perhaps frozen in time.

*Lithography will decline by 12 per cent in 2008.

''The increased adoption of 193 immersion continues to take more share than older technologies. The 193 immersion adoption should continue to drive market outperformance of the stepper segment in 2009,'' according to Gartner.

*Factory automation will fall by 13 per cent in 2008.

This market will ''decline as new fabs continue to be built, even if they are not ramped up as aggressively in the past. In the long term, as capacity ramp-ups catch up with new construction, this segment will show performance in line with the remainder of the market,'' according to Gartner.

*Deposition, etch and implant will see overall declines in the 25 per cent range.

''Unlike lithography, these tools do not change as processes are migrated to finer geometries, so their shipment rates largely depend on actual capacity additions rather than process improvements,'' according to Gartner.

*For this year, ATE will see a decline of about 20 per cent.

''Our current expectations reflect improved market conditions beginning in the second half of this year and set 2009 up for a nice rebound,'' according to the firm.

- Mark LaPedus
EE Times

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