Gartner Dataquest has cut back on its estimates for 2003 semiconductor equipment sales, but is sticking to its forecast of improved long-term growth.
Gartner says worldwide semiconductor capex will be $29.7 billion in 2003, a 7.9% increase from $27.7 billion in 2002 but below the $29.9 billion it predicted in July (see WaferNews, V10n30, July 28, 2003). Capital equipment, initially projected to be $20.6 billion, is now expected to come in at $19.2 billion, a 3.5% increase from 2002. Wafer-fab equipment sales are now projected to grow 1.1% to $16.4 billion, down from earlier projections of $17.6 billion. Packaging and assembly, previously pegged at $2.97 billion, is now projected to be $2.81 billion, still nearly 20% growth from 2002.
“Ultra-conservatism is holding back spending on new equipment, at least for the wafer fab,” said Klaus-Dieter Rinnen, managing VP of Gartner’s semiconductor manufacturing and design research group. On the other hand, Rinnen suggested that this hesitance, while difficult for capital equipment vendors, may result in a recovery pace that’s best for the industry as a whole. “After a dramatic drop in second quarter sales, wafer fab equipment is finally picking up steam in the second half of the year, but it is more of a deliberate investment increase than an industry-wide surge,” he noted.
Gartner estimates 3Q fab utilization to be 86.5% overall, and 93% for 0.18-micron and below, approaching levels at which spot shortages may pop up. Nevertheless, Gartner expects empty shell capacity will hit 34% of total installed 200mm and 300mm capacity by year’s end. “Equipment orders remain at an alarmingly low rate,” said Rinnen, adding that the 16 fabs (both 200mm and 300mm) due to come online by July 2004 will likely “begin production at low levels and ramp slowly until the industry approaches a widespread supply limited condition.”
Despite the lowered projections, Gartner expects chipmaking equipment sales will still exceed expectations in 2003, and continue to grow in 2004. Low chip inventories, increasing end-market demand, and streamlined manufacturing due to conservative spending will drive this trend, according to Gartner.
While equipment sales and order momentum are weaker than expected, the packaging and assembly segment remains a bright spot, experiencing its best growth since 2000. Jim Walker, research VP for Gartner’s worldwide semiconductor manufacturing group, notes that lead frame-based leadless packages are ramping up at a rate not seen in nearly two decades, and are enjoying particular favor in wireless and portable devices, replacing small outline ICs (SOIC) and lower-lead-count quad flat packages (QFP), he said.