Gartner Predicts 45 Percent Decrease in Semiconductor Spending

Intel, Advanced Micro Devices, Samsung and other semiconductor companies will spend 45 percent less on manufacturing equipment and capital expenditures in 2009 compared with 2008, according to a new Gartner report.
The economy is again being blamed, this time for a predicted “dramatic downturn” in capital equipment spending for the semiconductor industry this year, according to the March 9 Gartner report.
The research firm forecasts 2009 spending will total $16.9 billion-a 45.2 percent decline from 2008, which saw $30.8 billion in spending.
“The overspending on memory in the last three years, combined with a retrenching consumer market, presents little potential for an upside until 2010,” Klaus Rinnen, an analyst with Gartner, wrote in the report.
On the upside, spending for 2010 is forecasted to reach $20.3 billion-an increase of 20.1 percent from 2009 projections.
Gartner anticipated a 17 percent revenue hit for the semiconductor industry-which includes Intel, AMD and Samsung-in mid-December. However, by February those losses increased to 24 percent, which equals out to $194.5 billion in revenue for the year.
Companies such as Samsung and Texas Instruments have cut costs by eliminating facilities and going fabless. AMD was the latest to do this, announcing on March 4 the creation of Global Foundries, along with partner ATIC. Global Foundries is expected to build manufacturing lines in Dresden, Germany, as well as Saratoga County, New York.
Also putting themselves in the news, Intel and Taiwan Semiconductor Manufacturing (TSMC) signed a “memorandum of understanding” on March 2, in which Intel will expand the reach of its Atom processors into netbooks and TSMC will benefit from a peek at some Intel intellectual property.
In addition, the Gartner report points to a 46 percent decrease in worldwide wafer fab equipment in 2009 and a 47 percent fall for the packaging and assembly equipment market. Good news isn’t expected until 2010 through 2013, which Gartner predicts will show growth across all semiconductor sectors.