STAMFORD, CONN.: Semiconductor capital equipment growth is slowing, and the trough will push out into the first quarter of 2008, leading to flat growth in 2008, according to the latest forecast by Gartner, Inc. Worldwide semiconductor capital equipment spending is projected to total $43.7 billion in 2007, a 4.1 percent increase from last year. In 2008, the worldwide spending is expected to increase 0.3 percent (see Table 1).

"A competitive investment race among dynamic random-access memory (DRAM) vendors that did not abate — contrary to common sense, despite rampant overcapacity — combined with an accelerated retooling with more cost-effective 300-mm capacity, fuelled a strong first half that is tailing over into the second half of the year," said Dean Freeman, research vice president for Gartner's semiconductor manufacturing group. "The stronger 2007 is borrowing from 2008, and the second-half softening will have ramifications on growth in the coming years."

The increase in worldwide semiconductor capital equipment spending in 2007 (see Table 1) will impact 2008, and Gartner analysts expect 2008 to move from slightly positive for capital expenditure (capex) and wafer fab equipment (WFE) to slightly negative. The outlook for back-end equipment markets remains positive.
 

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

	2005	2006	2007	2008	2009	2010	2011
Semiconductor Capital Spending	47,197.1	56,312.7	57,144.8	54,602.9	59,786.0	54,567.7	58,559.8
Growth (%)	-2.8	19.3	1.5	-4.4	9.5	-8.7	7.3
Capital Equipment	34,141.1	41,950.2	43,673.3	43,796.3	48,057.1	43,079.4	48,539.1
Growth (%)	-10.0	22.9	4.1	0.3	9.7	-10.4	12.7
Wafer Fab Equipment	25,952.3	32,610.1	34,707.1	34,267.4	38,158.9	34,409.5	38,132.6
Growth (%)	-8.5	25.7	6.4	-1.3	11.4	-9.8	10.8
Packaging and Assembly Equipment	4,415.9	5,217.8	5,041.2	5,317.5	5,514.3	4,854.9	5,734.6
Growth (%)	-7.7	18.2	-3.4	5.5	3.7	-12.0	18.1
Automated Test Equipment	3,772.9	4,122.3	3,925.0	4,211.4	4,383.9	3,815.0	4,671.9
Growth (%)	-21.2	9.3	-4.8	7.3	4.1	-13.0	22.5
Other Spending	13,056.0	14,362.5	13,471.5	10,806.7	11,728.9	11,488.3	10,020.7
Growth (%)	23.0	10.0	-6.2	-19.8	8.5	-2.1	-12.8

Source: Gartner (October 2007)