Semiconductor Manufacturing Equipment Spending Falls in 2013

The fourth quarter of 2013 was particularly slow as major semiconductor assembly and test services vendors pushed out orders due to market uncertainty.

Worldwide semiconductor capital equipment spending totaled $33.8 billion in 2013, an 11.5 percent decline from 2012, according a report from IT research firm Gartner.

Applied Materials held onto the top spot based on its relative strength in deposition and etch, the report said.

In addition, relative strength in lithography helped ASML to retain the No. 2 position, although there were limited sales in the extreme ultraviolet (EUV) market.

Lam Research moved into the third spot due to its strong performance in etch and deposition.

Tokyo Electron, just like other companies headquartered in Japan, was impacted by the significant decline in the yen-to-U.S.-dollar exchange rate, as well as an unfavorable customer buying pattern.

In the back-end segments, all major categories experienced significant declines.

The report noted the fourth quarter of 2013 was particularly slow as major semiconductor assembly and test services (SATS) vendors pushed out orders due to market uncertainty.

"With this as a backdrop, capital spending was muted and dominated by a few top players," Klaus-Dieter Rinnen, managing vice president at Gartner, said in a statement. "A revival of memory-related spending during the year was not enough to stem the decline in equipment sales. Despite increased foundry investments, logic-related spending was a dampening force. Consequently, manufacturing equipment sales saw slow, sequential quarterly growth, and a fourth-quarter sales explosion was not enough to stop the second straight year of decline."

Meanwhile, wafer-level manufacturing equipment demand performed above the market, with strength in lithography and associated processes, while back-end manufacturing segments fared significantly worse than average.

Overall, wafer-level manufacturing outperformed the market in 2013, on relative strength in dry etch, lithography, manufacturing automation and deposition.

However, spending was selective, focused on upgrades and latest-technology buys, with little addition of capacity. Logic spending focused on preparing for 20nm/14nm (nanometer) production.

A further trend was the rise of the sales share of the top 10 vendors, now at 70 percent, compared with 68 percent in 2012.

"The top five vendors command nearly 57 percent of the total market, up 5 points from the prior year," Rinnen said. "The advance of these large players symbolizes losses of smaller players in the competitive race and an increasing market dependence on a few vendors in the equipment market."

In addition, a few subsegments managed to expand, such as steppers in lithography, nontube chemical vapor deposition, conductor etch, rapid thermal processing and furnaces, and select process control segments, such as patterned wafer inspection, defect review and classification.