Spending on wafer fabrication kit to fall next year

Investments in wafer making equipment suffer for two more years

The global spend on wafer fabrication equipment will shrink 9.7 per cent from 2012 to a total of $27bn (£16.6bn) in 2013, says Gartner.

Bob Johnson, research vice president at Gartner, said the 2012 year had begun strongly as foundries and other manufacturers boosted production of their sub-30nm hardware.

"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," he said.

"However, demand for new equipment for logic production will soften as yields improve, leading to declining shipment volumes as the industry heads into 2013."

Although the decline in spending was less than in 2011, when it contracted 17.4 per cent, the market would not return to growth until 2014, Gartner said. Macroeconomic weakness and flat capital investment have been major contributing factors.

"While demand from smartphones and media tablets is producing leading-edge demand for logic production, it is not enough to bring total utilisation levels up to desired levels," Johnson said.

"Utilisation rates will begin to climb again in the second quarter of 2013 as demand for chip production returns. Also capital spending restraints in the second half of 2012 and first half of 2013 will slow new capacity additions. Overall utilisation rates will return to normal levels by the end of 2013, providing continued impetus for capital investment."

Gartner has found that revenue from global sales of semiconductors as a whole so far have declined in 2012 by three per cent to $297.6bn. That category was also expected to pick up in the second half, paving the way for a 2013 recovery, but Gartner said third quarter orders remained below seasonal expectations.