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Despite Strong Demand in Some Segments, Worldwide Semiconductor Capital Equipment Sales on Pace for 12 Percent Decline in 2005, According to Gartner |
STAMFORD, Conn. October 5, 2005 - Despite strong demand in some consumer electronics segments, worldwide semiconductor capital equipment spending will still experience a double-digit decline in 2005, according to Gartner, Inc.
Worldwide semiconductor capital equipment spending is projected to total $33.2 billion in 2005, an 11.6 percent decline from 2004. All segments of the semiconductor capital equipment market are projected to decline in 2005 (see Table 1).
"While end user demand is still strong in some product areas, such as memory capacity in response to surging demand for flash devices, it is not enough to push the equipment market into any significant growth for either 2005 or 2006," said Bob Johnson, research vice president for Gartner's semiconductor manufacturing and design research group.
"What is encouraging about this down cycle is how rapidly semiconductor manufacturers responded to increasing inventories last year and lowering utilization rates this year," Mr. Johnson said. "While new capacity additions are in synch with anticipated demand, end market growth for semiconductors is expected to be modest for the next few years, so we expect a similarly modest upcycle for equipment."
Table 1
Worldwide Semiconductor Capital and Equipment Spending Forecasts (Millions of Dollars)
|
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
| Semiconductor Capital Spending |
48,032.8 |
45,666.8 |
42,748.9 |
46,429.2 |
62,083.9 |
58,246.6 |
| Growth (Percent) |
61.9 |
-4.9 |
-6.4 |
8.6 |
33.7 |
-6.2 |
| Capital Equipment |
37,580.5 |
33,218.1 |
33,963.1 |
39,072.5 |
50,083.2 |
43,424.1 |
| Growth (Percent) |
64.2 |
-11.6 |
2.2 |
15.0 |
28.2 |
-13.3 |
| Wafer Fab Equipment |
28,221.3 |
25,550.9 |
24,491.8 |
26,771.6 |
35,844.9 |
32,493.5 |
| Growth (Percent) |
68.6 |
-9.5 |
-4.1 |
9.3 |
33.9 |
-9.3 |
| Packaging and Assembly Equipment |
4,569.2 |
3,887.2 |
4,746.3 |
6,100.9 |
7,133.3 |
5,270.6 |
| Growth (Percent) |
45.9 |
-14.9 |
22.1 |
28.5 |
16.9 |
-26.1 |
| Automated Test Equipment |
4,790.0 |
3,780.0 |
4,725.0 |
6,200.0 |
7,105.0 |
5,660.0 |
| Growth (Percent) |
58.5 |
-21.1 |
25.0 |
31.2 |
14.6 |
-20.3 |
Source: Gartner Dataquest (October 2005)
Worldwide wafer fab equipment spending is projected to decline 9.5 percent in 2005. This market is forecast to decline in 2006 as well and return to positive growth in 2007. As semiconductor manufacturers trimmed production levels in response to excess inventories, utilization rates bottomed in the first quarter of 2005, but will rise to a 2005 peak in the third quarter. However, the effects of new capacity coming on line and seasonal production variations will cause utilization rates to decline in the fourth quarter of 2005 and the first quarter of 2006.
"Compared with prior cycles, the swings in utilization rates are relatively mild because manufacturers are managing capacity increases carefully and acting quickly to slow new equipment purchases in response to slowdowns in production rates," Mr. Johnson said.
The packaging and assembly (P&A) equipment market has continued to perform better than previously expected. Worldwide P&A equipment is forecast to contract 14.9 percent in 2005. This is better than Gartner's earlier projection in July of this year for a 16.5 percent decline.
For the first half of 2005, revenue dropped significantly for many key automated test equipment (ATE) vendors. The ATE market is now forecast to decline 21 percent this year, with weakness throughout all regions and product segments. However, it seems that ATE spending has picked up in the second half of the year, and Gartner analysts expect the ATE market to see 25 percent growth in 2006, which should mark a recovery that will last for several years.
Additional information is available in the Gartner report "Semiconductor Capital Equipment Sales Correction Stretches into 2006." The report is available on Gartner's Web site.
This research is produced by Gartner Dataquest's Semiconductors Manufacturing and Design program. This research program, which is part of the overall semiconductor research group, provides a comprehensive view of the entire semiconductor industry, from manufacturing and design to device and application market trends. More information on Gartner's semiconductor research can be found in the Gartner Semiconductor Focus Area at http://www.gartner.com/semiconductors.
Gartner analysts will provide additional analysis on the semiconductor industry at the Gartner Semiconductor Industry Outlook Local Briefing, to be held December 6, 2005, at the Double Tree Hotel in San Jose. Gartner Dataquest's Semiconductor Industry Outlook: System on Chip Defines the Battle Lines will provide a detailed semiconductor market update covering device, application and manufacturing issues, plus a look at the hottest and "must target" applications for System on Chip (SoC) devices and Gartner's views of the future of SoC markets and technology.
For complete event details, please visit the Semiconductor Industry Outlook Local Briefing Web site here. Members of the media can register by contacting semiconductor.briefing@gartner.com.
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About Gartner:
Gartner, Inc. (NYSE: IT) is the leading provider of research and analysis on the global information technology industry. Gartner serves more than 9,000 clients, including chief information officers and other senior IT executives in corporations and government agencies, as well as technology companies and the investment community. The Company focuses on delivering objective, in-depth analysis and actionable advice to enable clients to make more informed business and technology decisions. The Company's businesses consist of Research and Events for IT professionals; Gartner Executive Programs, membership programs and peer networking services; and Gartner Consulting, customized engagements with a specific emphasis on outsourcing and IT management. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, and has more than 3,900 associates, including more than 1,200 research analysts and consultants, in more than 75 countries worldwide. For more information,
visit www.gartner.com.
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