Semiconductor equipment spending to rise in 2004
James Carbone -- Purchasing, 2/19/2004 2:00:00 AM
Worldwide semiconductor capital equipment spending will grow 36% to $29.5 billion in 2004, according to market researcher Gartner. The capital equipment market includes wafer fab equipment, packaging and assembly equipment and automated test equipment.
"The outlook for 2004 is bright," said Klaus-Dieter Rinnen, managing vice president for Gartner's semiconductor manufacturing and design research group. "The return of a corporate investment cycle, a PC upgrade cycle that is gaining steam, a broad-based recovery in end-user applications, low inventories and tight manufacturing capacity all are converging to provide for strong growth in all equipment segments."
Capital spending by semiconductor companies has been flat at 2002 levels although chip demand is rising and inventories are low. However, chipmakers will start investing because fab utilization rates are high. Gartner says 2003 ended with an average utilization of about 90%. Utilization rates for leading-edge fabs exceeded 95%.
"These trends should continue through 2004 and well into 2005 as manufacturers finally begin to invest heavily in response to increased end market demand and improved profitability," Rinnen says.
High utilization levels will drive growth in the wafer fab equipment (WFE) market in 2004. The WFE market is projected to expand 34.1% in 2004 to $22 billion, up from $16.4 billion in 2003.
Chipmakers may be a little slow to add capacity because running a fab at high utilization rates leads to higher profits. However, waiting too long to add capacity can be risky if demand booms and suppliers cannot fulfill orders.
Now Playing: 