Fab spending decline to continue in 2013

LONDON – Global spending on wafer fab equipment is is expected to reach $29.9 billion in 2012, a decrease of 17.4 percent from $36.2 billion in 2011, according to market research firm Gartner Inc.

Gartner forecast that the decline will continue in 2013 as wafer fab equipment spending goes down to $27 billion, a 9.7 percent decline from 2012, the firm said. The market is projected to return to growth in 2014.

"Demand for new equipment for logic production will soften as yields improve, leading to declining shipment volumes as the industry heads into 2013," Bob Johnson, Gartner research vice president, said in a statement.

Wafer fab manufacturing capacity utilization is a key indicator for the acceleration and deceleration of spending plans. Gartner predicts that utilization will decline below 80 percent by the end of 2012 before slowly increasing to about 85 percent by the end of 2013.

"High inventories, combined with overall market weakness, will continue to depress utilization rates into the first half of 2013," said Johnson.

Leading-edge utilization declined to the mid-80-percent range by the second half of 2012 and will move into the low-90-percent range by the end of 2013. Typically 90 percent is seen as a trigger point for increased wafer fab spending. Memory will continue to be weak through 2013, with maintenance-level investments for DRAM and a slightly down NAND market until supply and demand are in balance, Gartner forecasts. Meanwhile 2014 should begin a growth cycle that is expected to last through 2016.