Gartner quickly lowers 2008 capex outlook

Feb. 4, 2008 – Having tallied the top semiconductor manufacturers’ final reporting and projections for 2008, Gartner has come to a sobering conclusion: its initial forecast of a spending slowdown in 2008 wasn’t nearly slow enough.

The firm now projects a 16.6% slump in capex this year, vs. a Dec. 18 prediction of -13.2%. Many expectations for individual company spending plans in 2008 are falling well short (see list below), though in some cases spending was pulled from the start of 2008 to the end of 2007 in a normal shift.

While the top three companies (Samsung, Intel, Hynix) remained relatively flat, many other companies are showing significant decreases in 2008 spending, “indicating a more conservative approach than had been anticipated, responding to DRAM oversupplies and increased risks of a US recession.

“Semiconductor manufacturers are getting conservative and are adopting a wait-and-see mode until the exact nature of the current economic uncertainties becomes more apparent,” write Gartner analysts Bob Johnson and Barbara Van in a research note. While a faster/steeper fall could suggest a quicker return to growth, ” the current economic and semiconductor market uncertainties force us to adopt a wait-and-see attitude,” and the firm continues to foresee “more downside risk for 2008 than upside potential.”

Not surprisingly, the most aggressive reactions are in the memory sector, “in which there’s a virtual red-ink epidemic,” the analyst write. After spending $1.9B in 2007, ProMOS, for example, has put its entire 2008 capex spending “on hold for at least the first half of the year,” Gartner notes.

“It would not be a surprise to see further cutbacks in memory spending, especially DRAM, if demand for these chips worsens, and price softness continues,” according to the Gartner analysts.

Other significant capex cutbacks are happening in the foundry segment, where top firms TSMC, UMC, and Chartered all have publicly stated their intent to rein in spending (though China’s SMIC still plans to maintain flat spending this year).

POST A COMMENT

Easily post a comment below using your Linkedin, Twitter, Google or Facebook account. Comments won't automatically be posted to your social media accounts unless you select to share.