Worldwide wafer fab equipment spend drops in 2012 -

Sales of wafer fab equipment (WFE) spending dropped.

According to Gartner, the industry is on pace to total $31.4 billion in revenues this year, a decline of 13.3 percent from 2011 spending of $36.2 billion.

The analyst house said that while the market would improve in 2013, it would not return to positive growth, with WFE spending projected to total $31.2 billion, a 0.8 percent decline from 2012.

However, there seems to be some light at the end of the tunnel, with the company claiming that in 2014 the market would return to growth. It predicts that it will, probably,  increase 15.3 percent to surpass $35.9 billion.

According to Bob Johnson, research vice president at Gartner, the outlook for the semiconductor equipment markets had deteriorated because the macro economy had weakened.

He said WFE started off the year strong, as foundries and other logic manufacturers ramped up sub-30-nm (nanometer) production. However, he warned demand for new equipment logic production "would soften as yields improve, leading to declining shipment volumes for the rest of the year."

According to Gartner, wafer fab manufacturing capacity utilisation will decline into the low 80 percent range by the end of 2012 before slowly increasing to about 87 percent by the end of 2013.

It added leading-edge stuff will return to the high 80 percent range by the second half of 2012, and move into the low 90 percent range through 2013, providing for "a somewhat positive capital investment environment".

Gartner believes that memory will continue to be weak through 2012, with strong declines in DRAM investments and a virtually flat NAND market. By rubbing its crystal ball its analysts forsee a modest growth pattern beyond 2012 with normal, but relatively benign, cyclical fluctuations as the industry returns to mid-single-digit growth in device revenue, and capital investment responds accordingly.

And it's not much better for foundry capital spending, which has been revised by the company downward for 2012 and 2013 due to an earlier yield improvement on 28 nm technology achieved by some foundries and a higher downside risk of wafer demand in the fourth quarter of 2012 and first quarter of 2013.

It said foundries will likely tighten their short-term capex when they experience a more than 10 percent reduction of the fab utilisation rate later in 2012.

Wafer demand will drop for several quarters due to the revised downward semiconductor device outlook and the earlier success on yield improvement of 28 nm low-power polysilicon silicon oxynitride (SiON) technology achieved by some key foundries, although the yield of 28 nm high-k metal gate (HKMG) remains below normal.