Forecasts for capital expenditure in the chip industry have been reduced in the short term, affecting 2013 totals, due to perceived softness in the smartphone and tablet computer markets. However, a more favorable general economy is prompting a better outlook for 2014 and 2015.
Market research firm Gartner reckons capital spending in the semiconductor industry is going to fall by 6.8 percent in 2013 to $54.77 billion before jumping by 14.1 and 13.8 percent respectively in 2014 and 2015. The sub-market of semiconductor manufacturing equipment is set to decline more steeply in 2013, by 8.5 percent, to $34.63 billion, while equipment specifically for wafer fabs will drop by 9.1 percent to $26.95 billion, the company said in a press release.
Gartner has knocked a couple of billion dollars of each of these markets for 2013 compared with a forecast it gave in June 2013 (see Chip making equipment market to bounce back in 2014). The firm said the reduction in wafer fab spending is due to lowered investment in equipment for 28nm production following a softening in the premium mobile device market. The reduced investment seen in the third quarter is expected to continue in Q4 although spending for the production of memory ICs has picked up some of the slack, Gartner said.
Intel, TSMC, and Samsung are responsible for more than half of the chip capex in 2013 and the top ten firms account for 76 percent. Some easing of the situation may come late in the year as Intel prepares for 14nm production in 2014.
Longer term, Gartner expects the general economic malaise to have worked through globally, resulting in two stronger years of electronic equipment and semiconductor component sales and a concurrent rise in capex spending.
According to Gartner's latest forecast the value of electronic equipment production will rise by 2.5 percent to hit $1.51 trillion in 2013, and will rise by 4.2 and 4.5 percent in the subsequent two years. The semiconductor component market, which has been stalled at $300 billion for several years will pop up by 5.2 percent to reach $315 billion in 2013. Growth of 5.6 and 3.2 percent will follow in 2014 and 2015 respectively, Gartner predicts.
The manufacturing capacity utilization has been hovering around 80 percent and this will build to mid-80 percent range at the beginning of 2014. However, leading-edge capacity is more heavily utilized and is likely to move to the low-90 percent by that time. A movement above 90 percent is often seen as trigger point to order up more equipment.