Gartner: Semiconductor Capital Spending Bottoms Out In 2009

Capital spending on semiconductor equipment should bottom out this year and start growing again next year, according to a new report by Gartner.

The analyst firm said worldwide semiconductor capital spending should hit $24.3 billion for all of 2009. That represents a 44.8 percent drop from the estimated $44.0 billion spent in 2008.

However, Gartner said, spending should rise 20.9 percent in 2009 to reach $29.4 billion.

The spending comes during one of the worst downturns in the product category's history, with semiconductor equipment manufacturers cutting unnecessary spending and reducing inventory.

Spending on wafer fab equipment, the biggest component of the overall semiconductor capital spending, is expected to drop 47.1 percent in 2009 compared to 2008. This follows a drop of nearly 33 percent in 2008 over 2007, Gartner said. Of that, the hardest-hit portion was lithography, where spending for the most advanced memory tools has been cut thanks to a drop in capital spending on memory to levels not seen since 2002.

However, wafer fab equipment spending is expected to increase 26.4 percent in 2010 over 2009, and by 2011 be the fastest-growing part of the overall semiconductor capital spending, Gartner said.

Also hard hit was spending on packaging and assembly equipment, which Gartner expects to fall by nearly 47 percent in 2009 over 2008, and worldwide automated test equipment, which it said should drop 32 percent.

Looking forward, Gartner expected semiconductor capital spending to increase through 2012, with another drop in spending to come in 2013.

Klaus Rinnen, managing vice president at Gartner, wrote in the report that the economic crisis has hit the semiconductor equipment industry in 2009, but growth should return in the next few years.

"Undoubtedly it will be a long, slow road to complete recovery, but we are seeing the first indications of increased foundry activity to replenish inventories depleted by the cutbacks of the past few quarters," Rinnen wrote.