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Semiconductor Equipment Investment by Suppliers Will Fall in 2012

While suppliers will cut back on semiconductor spending in 2012, they will increase spending by 7.4 percent in 2013.
Semiconductor suppliers in 2012 will invest 10.8 percent less in new chip equipment next year compared to this year, according to trade association SEMI.

In its year-end capital equipment forecast, SEMI reported that while the spending on new chip equipment increased 4.7 percent to $41.8 billion in 2011, it will fall to $37.3 billion in 2012.

However, spending by chip suppliers on new equipment will bounce back in 2013 when spending will rise 7.4 percent to $40 billion. SEMI noted that equipment spending increased 151 percent in 2010 to $39.9 billion.

“Given the exceptional growth in the market from 2009 to 2010, the lower growth rate in 2011 is expected, and not surprising," said Denny McGuirk, president and CEO of SEMI. "The industry experiences highly cyclical markets, with the rebound likely to occur in 2013."

In 2012, wafer processing equipment, the largest product segment by dollar value, will fall 11.6 percent to $28.9 billion after growing about 9.3 percent in 2011. Spending on semiconductor test equipment will end 2011 falling 10.3 percent and then will drop about 4.4 percent in 2012, according to SEMI.

The market for assembly and packaging equipment will decline by 12.5 percent to $3.4 billion in 2011 and will drop 10.4 percent in 2012.

In 2012, South Korea will be the only region of the world where equipment spending will rise. Chip suppliers in South Korea will boost semiconductor spending by 7.5 percent to $8.6 billion. In North America, chip equipment spending will fall 23.1 percent to $6.77 billion, SEMI reported.

Spending on semiconductor equipment by suppliers is often cyclical and usually increases the year after suppliers have had strong growth in chip sales.

Increases in spending by semiconductor makers are good news for chip buyers because it often results in an increase in semiconductor supply, shorter leadtimes, and lower prices.