Gartner cuts 2011 fab tool forecast

December 16, 2010 // Dylan McGrath

Market research firm Gartner cut its forecast for the 2011 semiconductor capital equipment market, saying it now expects fab tool revenue to decline 1 percent next year. Gartner in September forecast that the fab tool market would grow 4.9 percent in 2011.

Saying 2010 will see the strongest growth on record, Gartner also increased its forecast for fab tool spending this year. The firm said it now expects fab tool revenue to grow 131 percent this year compared to a dismal 2009, reaching $38.4 billion. Gartner said in September it expected the fab tool market to be up 122 percent this year.

Klaus Rinnen, managing vice president at Gartner, said 2010 will be the strongest growth year ever for semiconductor equipment following the biggest decline ever in 2009. "Companies should prepare for a softer 2011, where equipment purchases will focus more on capacity than technology equipment," Rinnen said.

Rinnen said NAND flash has emerged as the leading memory segment in terms of capital spending, fueled by anticipated growth of media tablets. Capital spending by foundries is also expected to remain strong, Rinnen said, driven by the continued migration of IDMs to fab-lite models and by competition between Taiwan Semiconductor Manufacturing Co. Ltd., Globalfoundries Inc. and Samsung Electronics Co. Ltd. at the leading edge.

All segments of the semiconductor capital equipment market experienced exceptionally strong growth rates ranging from 118 percent to 140 percent in 2010, according to Gartner's estimates.



In the wafer fab equipment market, worldwide spending is on pace to total $29.7 billion in 2010, a 133 percent increase from 2009, Gartner said. Strong global demand for semiconductors, along with underinvestment in 2008 and 2009, led to pent-up demand for equipment once the economy turned, the firm said.

But overall fab utilization rates have been declining slowly, as more capacity has come online and production rates declined along with end-user demand. As a result, Garnter forecasts that wafer fab equipment spending will decline 3.4 percent in 2011 before returning to growth in 2012.

Packaging and assembly equipment spending is projected to surpass $5.9 billion in 2010, a 118.6 percent increase from 2009, Gartner said. The market is expected to grow 7 percent in 2011, with shipments to the Asia/Pacific region growing to 86 percent of shipments going to the region compared to 79 percent in 2010, Gartner said. By 2013, China will be the largest individual consumer of packaging and assembly equipment, accounting for just over 30 percent of the total market, according to Gartner.

Automated test equipment (ATE) spending is expected to reach $2.8 billion in 2010, up 140.5 percent from 2009, Gartner said. Coming off a dismal 2009, the ATE market grew solidly through the first three quarters of this year, but is expected to decline in the fourth quarter, Gartner said. The firm projects more quarterly declines for the ATE market in early 2011.

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