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June 27, 2012

Worldwide wafer fab equipment spending to drop by 8.9% in 2012

Production is getting back to more-normal levels, following a period of inventory correction

By CBR Staff Writer

Worldwide wafer fab equipment (WFE) spending is expected to decline by 8.9% to $33bn in 2012 from from $36.2bn recorded in 2011, according to Gartner.

The research firm said the market will return to growth in 2013 with WFE spending projected to reach $35.4bn, a 7.4% increase from 2012.

Gartner research vice president Bob Johnson said in 2012, WFE started off the year strong, as foundries and other logic manufacturers ramped up sub-30-nm production.

"The need for new equipment was stronger than originally anticipated, because strengthening demand for leading-edge devices required higher production volumes as yields had yet to reach mature levels," Johnson said.

"However, demand for new logic production equipment will soften as yields improve, leading to declining shipment volume for the rest of the year."

Wafer fab manufacturing capacity utilisation will drop to mid-80% range by the middle of 2012 before slowly increasing to about 87% by the end of 2012.

Leading-edge utilisation will return to the high-80% range by the second half of 2012, and move into the low-90% range through 2013, marking a positive capital investment environment, Gartner said.

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Increased demand and less-than-mature yields at the leading edge, is consuming increased capacity, due to which utilisation will begin to climb upward again in the second quarter of 2012, the research firm revealed.

Capital spending restraints through the second half of 2012 will also slow new capacity additions, with the result that overall utilisation rates will return to normal levels at the start of 2013.

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