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IDMs, Foundries Boost Equipment Spending

Spending on capital equipment by semiconductor suppliers will rise 10.2 percent this year.
Capital equipment spending by semiconductor companies will grow 10.2 percent to $44.8 billion in 2011, but spending is likely to decline in 2012, according to researcher Gartner Inc.

An expected semiconductor inventory correction combined with oversupply in foundry capacity will result in a 6.2 percent decline in capital equipment spending by chip suppliers next year, Gartner reported. However, capital equipment spending will increase again in 2013, growing 10.5 percent to $46.4 billion.

Gartner reported that 2011 spending is being driven by aggressive foundry spending, integrated device manufacturer (IDM) logic capacity ramping up to leading-edge process technology, and memory IC suppliers gearing up for double patterning.

All segments of the semiconductor capital equipment market are expected to experience growth in 2011.

Wafer fab equipment (WFE) revenue will grow 11.7 percent in 2011. Intel and other NAND flash suppliers and foundries will drive the need for leading-edge equipment.

Worldwide packaging and assembly equipment (PAE) revenue will post the least growth in 2011 at 3.6 percent. Back-end manufacturers had sizable growth in 2010, but the market began to slow in the fourth quarter of last year. Orders have softened as supply comes in line with demand.

In 2011, the worldwide automated test equipment (ATE) market is expected to grow about 6.9 percent. Gartner's 2011 ATE growth is driven by continued demand for system on a chip (SoC) and the advanced radio frequency (RF) segments of the market. Memory ATE will likely pull back in 2011 as DRAM capital expenditures soften. However, NAND testing platforms should remain strong this year.

Klaus Rinnen, managing vice president at Gartner, said the researcher's forecast has changed little since the first quarter despite the earthquake in Japan which disrupted the electronics supply chain. However, because of the "herculean efforts by Japanese vendors," the effects of the earthquake on the semiconductor industry were minimized, Rinnen added.