While the market will improve in 2013, it will not return to positive growth, with WFE spending projected to total $31.2 billion, a 0.8 percent decline from 2012. In 2014 the market returns to growth, as it is projected to increase 15.3 percent to surpass $35.9 billion.
"The outlook for semiconductor equipment markets has deteriorated as the macro economy has weakened," said Bob Johnson, research vice president at Gartner. "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 will decline into the low 80 percent range by the end of 2012 before slowly increasing to about 87 percent by the end of 2013. Leading-edge utilization will return to the high 80 percent range by the second half of 2012, and move into the low 90 percent range through 2013, providing for a somewhat positive capital investment environment.
"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," said Mr. Johnson. "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."
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 2012, 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.
Foundry capital spending has been revised downward for 2012 and 2013