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June 14, 2010

Global semiconductor capital equipment spending to exceed $35.4bn in 2010

But Gartner warns equipment vendors to prepare for slower growth heading into 2011

By CBR Staff Writer

Worldwide semiconductor capital equipment spending is expected to surpass $35.4bn in 2010, an increase of 113.2% compared to $16.6bn in 2009, according to a report from IT research and advisory firm Gartner.

However, the research firm warned that equipment vendors should prepare for slower growth heading into 2011. Worldwide semiconductor capital equipment spending is forecast to grow 6.6% in 2011.

According to the report, the overall worldwide wafer fab equipment (WFE) spending declined 47.4% in 2009, but is expected to grow by 113.3% in 2010, followed by 7.2% growth in 2011. The packaging and assembly equipment (PAE) market which declined 32% in 2009, is expected to increase by 104.7% in 2010, followed by a nominal 0.7% in 2011.

Gartner forecasts certain equipment segments to have substantially higher growth, with demand for equipment for advanced processes, such as wafer-level packaging, 3D processes and TSV manufacturing, expected to grow faster than the overall market.The worldwide automated test equipment (ATE) market is expected to grow by more than 133% in 2010.

The research firm said that the strong global demand for semiconductors, along with underinvestment in 2008 and 2009, has led to pent-up demand for equipment, and overall utilization rates will peak in the third quarter of 2010. Then the market will start a slow decline as more capacity comes on line and quarter-on-quarter demand will return to more-normal levels.

Klaus Rinnen, managing vice president at Gartner, said: "The drive to new technology nodes will drive semiconductor equipment growth in 2010. The demand for 40-nanometer (nm) and 45 nm devices is now ramping up, resulting in heavy foundry-based capital spending. Investment at the 3x node by Intel, an increase in spending by NAND memory producers, and the transition to the next generation DDR3 DRAM memory are the key investment growth drivers."

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"We could see a slight slowing in orders as 2010 ends, and the industry focuses on macroeconomic conditions. We expect capital equipment growth to continue through 2011, but at a reduced rate, as spending responds to slower growth in the semiconductor markets."

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