STAMFORD, USA: Eroding worldwide economic conditions are causing a dramatic downturn in capital equipment spending for the semiconductor industry, according to Gartner Inc. Analysts said the receding environment will continue throughout most of the year before a slow recovery begins in 2010.

Worldwide capital equipment spending is forecast to total $16.9 billion in 2009, a 45.2 percent decline from 2008 spending of $30.8 billion (see Table 1). Gartner analysts said the most likely scenario has worldwide capital equipment spending reaching $20.3 billion in 2010, a 20.1 percent increase from 2009.

“The dramatic crisis in world economics that came to light late in the third quarter and fully engulfed the fourth quarter of 2008 slowed capital spending in all segments of the semiconductor market,” said Klaus Rinnen, managing vice president for Gartner’s semiconductor manufacturing group. “The overspending on memory in the past three years, combined with a retrenching consumer market, presents little potential for an upside until 2010.”

Table 1
Worldwide Semiconductor Capital and Equipment Spending Forecasts (Millions of Dollars)

Worldwide wafer fab equipment spending is forecast to decrease 46 percent in 2009, and this follows a drop of 31 percent in 2008. In 2009, lithography will perform less than the overall market, showing a 52 percent decline compared with the total market drop of 46 percent.

For 2009, we expect lithography sales to be driven by the need for advanced 193 immersion tools for advanced production. However, with much of the need for more-advanced production capabilities coming from the memory sectors, demand for the most-advanced lithography tools will still be lukewarm.

After declining nearly 30 percent in 2008, the packaging and assembly equipment (PAE) market is expected to fall nearly an additional 47 percent in 2009. Some recovery for advanced process equipment could be seen in the second half of this year. On a regional basis, Asia/Pacific will increase its share of PAE consumption throughout the forecast period. From just under 73 percent of PAE shipments in 2008, Asia/Pacific will account for more than 82 percent of all PAE sales by 2013. China will be the largest individual consumer of PAE this year, accounting for about 26 percent of the total market.

The automated test equipment (ATE) market is projected to decline 34 percent in 2009. Macroeconomic conditions, as well as general industry conditions, will have to improve for quarterly growth to return in the middle of this year. On a regional basis, test equipment sales will be dominated by increased shipments to the Asia/Pacific region.

Shipments to Asia/Pacific will account for 70 percent of the total market in 2009, and it will grow to account for 77 percent of the market by 2013. This regional shift in test equipment consumption is largely driven by increased test outsourcing.