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Wafer Fab Equipment to Decline 13.3 Percent

Purchasing of wafer fab equipment by semiconductor companies will drop 13.3 percent in 2012 to $31.4 and will fall another 0.8 percent in 2013, according to researcher Gartner, Inc. Wafer fab equipment (WFE) spending will total $31.2 billion in 2013, before growing 15.3 percent to $35.9 billion, the researcher reported.

The outlook for the semiconductor equipment market is deteriorated this year as the economy weakens, according to Bob Johnson, research vice president at Gartner. He added that demand for WFE started off the year strong, as foundries and other logic manufacturers ramped up sub-30 nm (nanometer) production. However, demand for new equipment will soften the rest of the year, according to Johnson.

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, according to Gartner.

Johnson said overall semiconductor market weakness is continuing to depress fab utilization levels. For example demand for memory chips will continue to be weak through 2012, with strong declines in DRAM investment and a virtually flat NAND market.

Foundry capital spending has been revised downward for 2012 and 2013, due to an earlier yield improvement on 28 nm technology achieved by some foundries. However, foundry capital expenditure (capex) is revised upward for future years due to the more aggressive development schedule of extreme ultraviolet (EUV) and 450 mm wafers.

Foundries will likely tighten their short-term capex when they experience a more than 10 percent reduction of the fab utilization rate later in 2012, according to Gartner.

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