Firm sees capex downturn in 2011
9/7/2010 2:20 PM EDT
SAN JOSE, Calif. - Don't look now, but a fab tool downturn could be on the horizon.
2009 was an awful year in the fab tool market. But 2010 is hot, as capital spending is projected to hit $43.2 billion, up 97 percent over 2009, according to Barclays Capital.
2011 looked promising, but a chip lull appears to have reared its ugly head in recent weeks. Now, Barclays is lowering its capital spending forecast for 2011.
''We now offer a more conservative outlook for minus 10 percent year-over-year versus our previous estimate of plus 20 percent,'' said C.J. Muse, an analyst with the firm. ''In turn, we believe this would translate into WFE (wafer front-end equipment) spending dropping from about $27 billion in 2010 to about $25 billion in 2011. Importantly, we see the likely range for capex in 2011 to be minus 20 percent to plus 20 percent, so we believe this estimate is conservative and reflects likely weakening capex trends in the two areas where we see the greatest risk, foundry and DRAM.''
There is good and bad news. According to Muse, here's the good news for fab tool makers in 2011: 1) There is an ongoing ''capex arm's race'' in the foundry market between GlobalFoundries, Samsung and TSMC; 2) NAND demand is holding up and capex will jump by 19 percent; 3) Korea continues to spend on DRAM capacity; and 4) Nanya/Inotera will spend money on DRAM capacity.
According to the analyst, here's the bad news for next year: 1) Overall DRAM spending will likely to drop by 15 percent; 2) Foundry spending is expected to drop by 23 percent; 3) Logic spending, mainly at Intel, is expected to fall by 5 percent.