WW Wafer Fab Equipment Spending to Fall
As a result of the semiconductor equipment market outlook deterioration due to a weakened macro economy, worldwide wafer fab equipment (WFE) spending is on pace to total $31.4 billion in 2012, a decline of 13.3% from 2011 spending of $36.2 billion, according to Gartner, Inc.
The market is expected to improve next year but will not return to positive growth until 2014. In 2013, WFE spending is projected to total $31.2 billion, a 0.8% decline from 2012. Then in 2014, Gartner expects the market to increase 15.3% to surpass $35.9 billion.
Bob Johnson, Gartner research vice president said in a statement, “WFE started off the year strong, as foundries and other logic manufacturers ramped up sub-30-nm (nanometer) production. However, demand for new equipment logic production will soften as yields improve, leading to declining shipment volumes for the rest of the year.”
Wafer fab manufacturing capacity utilization is expected to decline into the low 80% range by the end of this year before slowly increasing to about 87% by the end of next year. Leading-edge utilization should return to the high 80% range by the second half of this year and move into the low 90% range through next year, providing for a somewhat positive capital investment environment, Gartner said.
“Although a period of inventory correction, which led to lowered production levels, appears to be over, overall market weakness is continuing to depress utilization levels. Increased demand, combined with less than mature yields at the leading edge, is creating shortages at the leading edge for logic, but that is not enough to bring total utilization levels up to desired levels. In the memory segment, some suppliers are even cutting production in an attempt to shore up weak market fundamentals,” Johnson said.
Gartner believes that memory will continue to be weak through 2012, with strong declines in DRAM investments and a virtually flat NAND market. Looking beyond this year, analysts foresee a modest growth pattern, with normal, but relatively benign, cyclical fluctuations as the industry returns to mid-single-digit growth in device revenue, and capital investment responds accordingly.
Gartner has revised downward its expectations for foundry capital spending for this year and next due to an earlier yield improvement on 28nm technology achieved by some foundries and a higher downside risk of wafer demand in Q4 and 1Q13. However, foundry capital expenditure (capex) is revised upward for future years due to the more aggressive development schedule of extreme ultraviolet (EUV) and 450mm.
Foundries will likely tighten their short-term capex when they experience a more than 10% reduction of the fab utilization rate later this year. Wafer demand will drop for several quarters due to the revised downward semiconductor device outlook and the earlier success on yield improvement of 28nm low-power polysilicon silicon oxynitride (SiON) technology achieved by some key foundries, although the yield of 28nm high-k metal gate (HKMG) remains below normal.
