STAMFORD, CT – Worldwide semiconductor manufacturing equipment spending is projected to total $34.6 billion in 2013, down 8.5% from 2012, says Gartner. The firm says capital spending will decrease 6.8% in 2013, due to diminishing 28nm investment from a softening in the mobile phone market.

"Weak semiconductor market conditions that continued into the first quarter of 2013 generated downward pressure on new equipment purchases," said Dean Freeman, research vice president at Gartner. "However, semiconductor equipment quarterly revenue is beginning to improve, and positive movement in the book-to-bill ratio indicated that spending for equipment will pick up in the remainder of 2013. Looking beyond 2013, we expect that the current economic malaise will have worked its way through the industry, and spending will follow a generally increasing pattern in all sectors throughout the rest of the forecast period."

Logic spending has been the key driver of capital spending in 2013; however, a softening in the mobile phone markets has dampened investment in 28nm during the third quarter, and this is projected to continue into the fourth quarter. Memory spending has picked up some of the slack, and the total spending in the second half of 2013 should outpace the first half of the year, says Gartner.

The firm says capital spending is highly concentrated among a handful of companies. The top three companies (Intel, TSMC and Samsung) account for more than half of 2013 spending. Spending by the top five semiconductor manufacturers exceeds 65% of total 2013 spending, with the top 10 accounting for 76% of the total. 2013 spending will be back-half-loaded, with capacity increases occurring as memory market conditions improve, and Intel prepares for initial 14nm production late in the year.

Gartner predicts 2014 semiconductor capital spending will increase 14.1%, followed by 13.8% growth in 2015. The next cyclical decline will be a drop of 2.8% in 2016, followed by a return to growth in 2017.

"In 2013, the wafer fab equipment picture is one of continuous quarter-over-quarter growth, as major manufacturers come out of a period of high inventories and a generally weak semiconductor market," said Freeman. "Early in the year, the book-to-bill ratio passed 1-to-1 for the first time in months, signaling that the need for new equipment is strengthening because demand for leading-edge devices is improving."

Gartner predicts wafer fab manufacturing capacity utilization will hover in the high 70% to low 80% range during the first half of 2013, building to the mid 80% range at the beginning of 2014. Utilization will move into the low 90% range by the end of 2013.

TAGS: Gartner, wafer fab manufacturing, capacity utilization, semiconductor, capital spending

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