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Spending on chip making equipment to fall 8.5%

Posted: 20 Sep 2013     Print Version  Bookmark and Share

Keywords:semiconductor manufacturing equipment  28nm  Gartner 

Worldwide semiconductor manufacturing equipment spending is expected to reach Rs.2.18 lakh crore ($34.6 billion) in 2013, an 8.5 per cent decline from 2012 spending of Rs.2.38 lakh crore ($37.8 billion). According to Gartner Inc., the capital spending will decrease 6.8 per cent in 2013, due to diminishing 28nm investment from a softening in the mobile phone market.

"Weak semiconductor market conditions that continued into the first quarter of 2013 generated downward pressure on new equipment purchases," said Dean Freeman, research vice president at Gartner. "However, semiconductor equipment quarterly revenue is beginning to improve, and positive movement in the book-to-bill ratio indicated that spending for equipment will pick up in the remainder of 2013."

Looking beyond 2013, we expect that the current economic malaise will have worked its way through the industry, and spending will follow a generally increasing pattern in all sectors throughout the rest of the forecast period, said the market research firm.

Logic spending has been the key driver of capital spending in 2013; however, a softening in the mobile phone markets has dampened investment in 28nm during the third quarter, and this is projected to continue into the fourth quarter of 2013. Memory spending has picked up some of the slack and the total spending in the second half of 2013 should outpace the first half of the year.

The capital spending is highly concentrated among a handful of companies. The top three companies (Intel, TSMC, and Samsung) account for more than half of 2013 spending. Spending by the top five semiconductor manufacturers exceeds 65 per cent of total 2013 spending, with the top 10 accounting for 76 per cent of the total. 2013 spending will be back-half-loaded, with capacity increases occurring as memory market conditions improve, and Intel prepares for initial 14nm production late in the year.

Gartner predicts that 2014 semiconductor capital spending will increase 14.1 per cent, followed by 13.8 per cent growth in 2015. The next cyclical decline will be a mild drop of 2.8 per cent in 2016, followed by a return to growth in 2017.

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"In 2013, the wafer fab equipment (WFE) picture is one of continuous quarter-over-quarter growth as major manufacturers come out of a period of high inventories and a generally weak semiconductor market," said Freeman. "Early in the year, the book-to-bill ratio passed 1-to-1 for the first time in months, signalling that the need for new equipment is strengthening because demand for leading-edge devices is improving."

Gartner predicts that wafer fab manufacturing capacity utilisation will hover in the high-70 per cent to low-80 per cent range during the first half of 2013 and building to the mid-80 per cent range at the beginning of 2014. Leading-edge utilisation will move into the low-90 per cent range by the end of 2013, providing for a positive capital investment environment.

For more statistics and forecasts, click here.

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