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IC Insights lowers capital spending forecast

Posted: 27 Apr 2009     Print Version  Bookmark and Share

Keywords:capital spending  electronic system  IC market 

Semiconductor capital spending is expected to drop for the second consecutive year, but look for a "turning point" in expenditures sooner than later, according to IC Insights Inc.

Overall, IC Insights has lowered its IC capital spending forecast. It is projected that capital spending will hit Rs.1.32 lakh crore ($26.6 billion) in 2009, down 39 per cent over 2008. In 2008, capital spending reached Rs.2.18 lakh crore ($43.9 billion), down 28 per cent over 2007, according to the firm. In 2007, capital spending hit Rs.3.03 lakh crore ($60.9 billion).

In January, IC Insights projected that capital spending would hit Rs.1.61 lakh crore ($32.4 billion) in 2009, down 30 per cent over 2008. Now, for the good news: "IC Insights believes that the turning point in capital spending, on a quarterly basis, is expected to coincide with a firming of IC ASPs beginning in Q2 09," according to the firm.

Spurred by pent-up electronic system demand and increasing average selling prices (ASPs), the IC market will register double-digit growth in 2010 and 2011 after beginning to recover in the second half of this year, says IC Insights.

On a q-on-q r basis, capital spending is projected to hit Rs.28,837.13 crore ($5.8 billion) in Q1 09, Rs.29,334.32 crore ($5.9 billion) in Q2, Rs.33,809.05 crore ($6.8 billion) in Q3 and Rs.40,272.54 crore ($8.1 billion) in Q4, according to the firm.

1999-2013 Worldwide capital spending trends (Click on image to enlarge.)

Another positive trend: After a two-year, double-digit decline in capital spending, the following year showed a double-digit increase, according to recent trends. So for 2010, capital spending is projected to hit Rs.1.52 lakh crore ($30.6 billion), up 15 per cent, the firm said.

The bad news: That's below the level in recent cycles, including 1999, when capital spending was Rs.1.65 lakh crore ($33.2 billion), it was noted.

- Mark LaPedus
EE Times

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