IT Pro is supported by its audience. When you purchase through links on our site, we may earn an affiliate commission. Learn more

Semiconductor investment set to fall

Gartner sees chip makers scale back their investment plans.


Worldwide spending on semiconductor equipment manufacturing is expected to decrease dramatically in 2012, according to a Gartner study.

The projected total spending for 2012 is estimated at $38.9 billion (24.5 billion), an 11.6 per cent decrease from the $44 billion (27.6 billion) spent in 2011.

The decline in spending was brought on by weak market conditions in 2011, caused by pullbacks in semiconductor industry expansion plans, according to Klaus Rinnen, a managing vice president at Gartner.

"This investment weakness will continue through the first half of 2012 and will surge in the second half of the year," Rinnen said. "There is a risk that some capacity expansion plans will slip from the second half of 2012 into 2013."

According to Rinnen, as downward pressure on utilisation rates decreases, utilisations are expected to increase in the second quarter of 2012.

"Once the supply is balanced, DRAM and foundry manufacturers will need to begin to increase spending to meet an increase in demand, as the PC market rebounds and consumers begin spending as the economy stabilises," Rinnen said.

If semiconductor manufacturers are spending less in anticipation of a decrease in demand, then it is likely that prices will rise in the future if demand does recover.

Worldwide semiconductor equipment manufacturing spending is expected to bounce back into the double digits in 2013. The Gartner study shows projected spending for 2013 increasing by 10.5 per cent to $43 billion (27 billion).

The trend will continue in semiconductor capital spending as well, with a decrease of 7.3 per cent in 2012 totaling $60.9 billion (38.3 billion) and increasing again in 2013 by 3.5 per cent.

The downward spiral is expected to spill over into other markets as well. Gartner predicts spending to decrease in wafer fab manufacturing capacity utilisation and back-end equipment markets which include wafer-level packaging and assembly equipment, die-level packaging and assembly equipment, and automated test equipment (ATE) will continue to decline in 2012.

"Above market action in advanced packaging will not be sufficient for a positive growth rate this year, but it will be the driver for growth in 2013," Rinnen said.

Both markets are also set to experience spending increases in 2013.

Featured Resources

Accelerating AI modernisation with data infrastructure

Generate business value from your AI initiatives

Free Download

Recommendations for managing AI risks

Integrate your external AI tool findings into your broader security programs

Free Download

Modernise your legacy databases in the cloud

An introduction to cloud databases

Free Download

Powering through to innovation

IT agility drive digital transformation

Free Download

Most Popular

Salaries for the least popular programming languages surge as much as 44%

Salaries for the least popular programming languages surge as much as 44%

23 Jun 2022
Attracting and retaining talent through training

Attracting and retaining talent through training

13 Jun 2022
The top programming languages you need to learn for 2022
Careers & training

The top programming languages you need to learn for 2022

23 Jun 2022