December 5, 2007 – Semiconductor equipment sales this year are turning out slightly better than expected, according to SEMI’s year-end forecast update, but the outlook for 2008 now indicates the equipment sector’s first year in the red since 2005.

Following a 23% surge in tool sales in 2006, equipment sales are seen slowing to 3.0% growth this year to $41.68B, though that’s better than the 1.1% SEMI predicted in July (and the group notes in a statement that in dollar amounts that’s still the second-highest total ever). Wafer processing equipment sales are seen rising 6% in 2007, with mixed results in backend tools (test down ~15%, assembly/packaging up ~11%).

In 2008 SEMI now thinks tool sales actually will contract -1.5% to $41.05B, instead of previous projections of a 6.5% increase, with ~5% lower sales in wafer processing tools only partially offset by 6%-8% growth in backend equipment.

2009, however, looks better than before, with double the growth as previously thought (8.8 vs. 4.4%) to $44.65B, and 2010 is also slightly more bullish at 7.5% growth to $47.99B. As with other years there’s a division in growth between front/backend — the projected ~8%-9% growth in tool sales during both years is weighted toward wafer processing (10.6%) and “Other” (14.6%).

Two interesting points are worth noting in SEMI’s forecast in 2009-2010. After topping $2.88B in 2008, assembly/packaging tool sales are seen plunging 17% over the next two years. Meanwhile, sales of “other” semiconductor manufacturing equipment are expected to surge nearly 35% over the same period to $4.22B.

By region, Taiwan is expected to rise nearly 30% to snatch the spot from Japan (-3.1%). Also enjoying growth on the plus side this year are Korea ($7.38B, 5.2%) and China ($2.87B, 23.8%), while North America ($6.67B, -8.9%), Europe ($3.18B, -11.7%) and rest-of-world ($3.25B, -12.4%) are in the red.

Next year, SEMI sees only Europe ($3.24B, 2.0%) and rest-of-world ($3.62B, 11.4%) staying above water in tool sales, with other regions ranging from flat to down 7%. Japan and Taiwan will continue to seesaw in the No. 1-2 slots in 2008 and 2009; both regions are seen cracking $10B by 2010, with Taiwan pulling further ahead after two years of low-teens growth.

Forecast by equipment segment

(Sales in US $B)

……………………………………2007 (% growth)…..2008 (% growth)…..2009 (% growth)…..2010 (% growth)

Wafer processing…………….30.61 (6.5%)……….29.12 (-4.9%)……….32.22 (10.6%)……….34.64 (7.5%)
Assembly/packaging………….2.72 (10.6%)……….2.88 (5.6%)………….2.64 (-8.2%)…………2.39 (-9.4%)
Test………………………………..5.47 (-14.7%)………5.91 (8.0%)………….6.20 (4.9%)……………6.74 (8.6%)
Other………………………………2.87 (0.6%)…………3.13 (9.1%)……………3.59 (14.6%)……….4.22 (17.7%)
TOTAL EQUIPMENT*………41.68 (3.0%)………..41.05 (-1.5%)………..44.65 (8.8%)………..47.99 (7.5%)

Forecast by region

……………………………..2007 (% growth)…..2008 (% growth)…..2009 (% growth)…..2010 (% growth)