VLSI Research bumps equipment forecast again
Dylan McGrath
EE Times
(05/25/2006 5:09 PM EDT)
SAN FRANCISCO — Due to stronger-than-expected first quarter growth, worldwide semiconductor capital equipment sales are expected to reach $62.8 billion in 2006, an increase of 23.2 percent from 2005, according to a forecast issued Thursday (May 25) by market research firm VLSI Research Inc.
VLSI (San Jose, Calif.) forecast 2006 growth of 13.2 percent growth for capital equipment just last month, after originally calling for 6 percent growth back in January.
VLSI's forecast for the IC market remained unchanged. The company continues to forecast 8.8 percent growth in ICs, reaching $209.7 billion.
The equipment forecast was bumped up due to double-digit growth in equipment sales during the first quarter, VLSI said. Preliminary results of the company's supplier revenue analysis for the first quarter show equipment revenues increasing to $15 billion, VLSI said, up 20 percent from the fourth quarter of 2005 and up 9.5 percent from the first quarter of 2005.
During the first quarter, utilization rates averaged 92 percent for front end manufacturing, 94 percent for test and 95 percent for assembly, VLSI said. Chip makers are running out of capacity because they did not invest enough in 2005 to deal with demand, leading to a boom in equipment demand, VLSI said.
But the growth may be front-loaded, the firm cautioned, adding citing certain indicators. The equipment-to-IC-sales investment ratio has averaged 31 percent so far this year, well above the healthy investment level of 20 percent, the first said. Equipment spending per square inch of silicon produced has been creeping up since February, VLSI said.
IC inventories have been inching up close to the levels of mid-2004, which was around the time when the industry began cutting back production, the firm said. VLSI believes forecasts that equipment bookings will trend downward during the second half of the year.
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