Challenging market conditions for 2009

Mike Allison, Managing Director, Semiconductor, FPD and Solar, Edwards, Crawley, UK

Market outlook in the semiconductor equipment industry is notoriously difficult due to its infamous cyclicality, but this year’s global turmoil in the financial markets has added a new dimension of complexity and uncertainly. Add to this the new synergistic segments such as flat-panel display (FPD) and solar, with their unique business drivers, and we now have an exponentially more complex planning situation.

In solar, we are currently experiencing the beginning of the first volume production cycle, driven primarily by global environmental concerns. A variety of forces — politics, consumer demand, oil prices, capital availability, cell efficiency, cell technology — make this emerging industry very difficult to forecast. While the early capital for this cycle is already committed, availability of funding for future cycles is less clear. Despite such uncertainties today, this industry looks set for continued strong growth.

The semiconductor capital equipment market, on the other hand, was already experiencing a cyclical downturn due primarily to excess capacity in the memory sector when the global financial crisis began. Weakening consumer confidence is likely to further slow demand for high technology appliances — a major driver for semiconductor consumption. As a result, spending on new semiconductor process tools is generally expected to be down 30% in 2009.

The FPD industry is in a similar mode to that of the semiconductor market, with expectations of about a 30-40% decrease in capital spending during 2009. In 2008, we saw large increases in capacity coming on stream to meet the buoyant LCD market, but the current credit crisis will likely restrict future growth until 2010.

Purchasing decisions will continue to be driven by technology and process capability, however, product cost, ongoing cost of ownership, energy efficiency, and reduced carbon footprint have become increasingly important in the selection process and in reducing operational costs. Recognizing the cyclical nature of this industry, Edwards will continue to invest in innovation during the downturn in an effort to benefit from future upturns and capitalize on any new opportunities that may arise.


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