Gartner predicts chip capital spending growth
4/14/2003 7:40:09 PM
www2.marketwatch.com
SAN FRANCISCO, April 14 (Reuters) - Global spending on equipment for making semiconductors is expected to grow more than 7 percent in 2003, after tumbling more than 37 percent last year, market research firm Gartner Group said on Monday.
An increase in capital spending by chipmakers could indicate a rebound for the industry, which is struggling to recover from its worst-ever downturn.
Uncertainties of war, a sluggish overall economy and budget cuts by corporations have contributed to the chip industry's slow recovery, analysts have said.
"Spending in 2003 will most likely be driven by a reduction of the high degree of uncertainty in the business climate," said Jim Hines, principal analyst for Gartner.
One barometer of capital expenditure plans is fab utilization, or the percentage of capacity at chip production plants that is being used. Higher capacity increases the likelihood of capital spending.
After showing some improvement last year, utilization rates at chip fabrication plants worldwide slid back in the first quarter of 2003.
Slow demand growth in the first half of the year will be matched by marginal increases in capacity and more fab closures, which should keep overall utilization rates flat, Gartner predicted.
Even so utilization rates are expected to be 90 percent at the end of the year, up from about 75 percent now, said Dean Freeman, principal analyst for Gartner.
After tumbling 37.4 percent last year, worldwide capital spending for semiconductors, the brains of computers, is projected to grow 7.2 percent to $30 billion, Gartner said.
Spending on equipment to make wafers, the silicon disks from which the chips are carved, is expected to grow 8.4 percent to $17.5 billion after a 31.7 percent drop last year, according to Gartner.
Spending on packaging and assembly equipment is forecast to grow 21.4 percent to $2.8 billion following a 21.6 percent decline in 2002.
The semiconductor market is "significantly underinvested, and while there is the absence of a driving killer application to incite spending, there are many areas that are ripe for improvement in 2003," Gartner said.
Intel Corp. (INTC) , the biggest purchaser of chip production equipment, has said it plans to cut its 2003 capital spending budget by as much as $1.2 billion from last year's level of $4.7 billion.
For 2004, Gartner is predicting growth rates of 38.9 percent for semiconductor capital spending, 40.5 percent for wafer fab equipment and 36.7 percent for packaging and assembly equipment.
Applied Materials Inc. (AMAT) , the world's biggest maker of chip production tools, said last month it would close offices and cut 14 percent of its workforce in its second major round of layoffs in five months.
Also on Monday, chip equipment tool maker Novellus Systems Inc. (NVLS) said profit quarterly profit rose in line with forecasts but wanred that orders would drop sharply due to hysteria over SARS (Severe Acute Respiratory Syndrome).
© Reuters 2003. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.
An increase in capital spending by chipmakers could indicate a rebound for the industry, which is struggling to recover from its worst-ever downturn.
Uncertainties of war, a sluggish overall economy and budget cuts by corporations have contributed to the chip industry's slow recovery, analysts have said.
"Spending in 2003 will most likely be driven by a reduction of the high degree of uncertainty in the business climate," said Jim Hines, principal analyst for Gartner.
One barometer of capital expenditure plans is fab utilization, or the percentage of capacity at chip production plants that is being used. Higher capacity increases the likelihood of capital spending.
After showing some improvement last year, utilization rates at chip fabrication plants worldwide slid back in the first quarter of 2003.
Slow demand growth in the first half of the year will be matched by marginal increases in capacity and more fab closures, which should keep overall utilization rates flat, Gartner predicted.
Even so utilization rates are expected to be 90 percent at the end of the year, up from about 75 percent now, said Dean Freeman, principal analyst for Gartner.
After tumbling 37.4 percent last year, worldwide capital spending for semiconductors, the brains of computers, is projected to grow 7.2 percent to $30 billion, Gartner said.
Spending on equipment to make wafers, the silicon disks from which the chips are carved, is expected to grow 8.4 percent to $17.5 billion after a 31.7 percent drop last year, according to Gartner.
Spending on packaging and assembly equipment is forecast to grow 21.4 percent to $2.8 billion following a 21.6 percent decline in 2002.
The semiconductor market is "significantly underinvested, and while there is the absence of a driving killer application to incite spending, there are many areas that are ripe for improvement in 2003," Gartner said.
Intel Corp. (INTC) , the biggest purchaser of chip production equipment, has said it plans to cut its 2003 capital spending budget by as much as $1.2 billion from last year's level of $4.7 billion.
For 2004, Gartner is predicting growth rates of 38.9 percent for semiconductor capital spending, 40.5 percent for wafer fab equipment and 36.7 percent for packaging and assembly equipment.
Applied Materials Inc. (AMAT) , the world's biggest maker of chip production tools, said last month it would close offices and cut 14 percent of its workforce in its second major round of layoffs in five months.
Also on Monday, chip equipment tool maker Novellus Systems Inc. (NVLS) said profit quarterly profit rose in line with forecasts but wanred that orders would drop sharply due to hysteria over SARS (Severe Acute Respiratory Syndrome).
© Reuters 2003. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world. |
