December 7, 2010 – As 2010 shapes up to be a record year for semiconductor equipment capex, so the following two years will be a fall back to Earth with low single-digit overall growth — though the group’s numbers indicate some clear market winners and losers.
In its semiannual market forecast, SEMI now sees an eye-popping 136% record surge in 2010 (following a -46% decline in 2009), up from a projected 104% in its July forecast issued at SEMICON West. But where SEMI once saw 9% growth in 2011 equipment sales, now it sees less than half that (4%), and only another 4% in 2012. SEMI president/CEO Stanley T. Myers in a statement expressed cautious optimism about the industry’s growth prospects, despite the pervasiveness of chips in everyday products.
Biggest increases in 2010 expectations since July are in the backend sector: both test and assembly/packaging are seen with about $600M more spending vs. the July update, about 22% more in terms of dollars; both segments are now at 155% growth (vs. 108%-109% in the July forecast). Wafer processing, still the overwhelming majority of spending, will see the biggest boost in terms of dollars ($3.65B), about 15% more than expected. Total chip tool spending is seen at $37.54B (vs. $32.5B in July), which is right around the same as 2004 levels, SEMI noted.
(Just a reminder, for perspective: backend spending is seen as a leading indicator of market cyclicality; generally speaking test/assembly/packaging are the first to go up when the market’s in an upturn.)
All regions are seeing higher growth than earlier predicted; five of the seven regions are seen doubling their spending in 2010 (and a sixth, Japan, will be at 98% growth). Most generous updates go to China (from 138% to 248% growth), with three other regions adding about 40 percentage points to their growth rates (Korea 188% -> 231%, ROW 109% -> 151%, Europe 98% -> 141%). Strictly in terms of dollars, Taiwan is still on top with just shy of $10B in spending, about 16% higher than No.2 South Korea (it was a 13% difference in the July outlook) and 88% more than North America (a 108% gap in July). SEMI tacked on over $1B in 2010 spending each for Korea and China, and at least three-quarters of a billion dollars for Taiwan and North America.
As usually happens, though, the higher numbers for 2010 come at the expense of the next year. SEMI now sees just 4% semiconductor sales growth in 2011, instead of the 9% it predicted back in July. Biggest hits come in the backend: test -5% (vs. 7% in the July forecast) and assembly/packaging (-17% vs. -5%), collectively losing $340M in sales next year.
Two regions, North America ($6B, 13% vs. 8%) and Europe ($2.9B, 25% vs. 9%), have more positive visibility into 2010 spending than six months ago. But Taiwan ($9.0B, -10% vs. 1%) and Korea ($8.28B, -4% vs. 8%) are actually seen spending less than in 2010, and other regions had their outlooks decreased (Japan $4.9B, 11% vs. 15%; RPW $4.08B, 13% vs. 26%; China $3.77B, 15% vs. 18%).
Mixed bag for 2012
Looking out to 2012, chip spending trends diverge significantly by SEMI’s calculations. Total chip tool spending will be flat at 4%, but spending on wafer processing tools will drop to just 2% growth to $30.8B. Meanwhile, though, backend will recover: 9% for test to $4.08B, and 11% for assembly/packaging to $3.31. And the "other" category will see the best growth of all:13% to $2.3B.
The major chip purchasing regions will be in the low single-digit growth (Taiwan 2% to $9.17B, Korea 5% to $8.72B, Japan 1% to $4.94B), while North America will decrease -3% to $5.81B. ROW, China, and Europe will crack (barely) double-digit growth at 10%-11%.
Two interesting points: ROW spent about $800M less than Japan in 2009 and 2010, but that gap will narrow to just $420M by 2012. And together China and ROW made up about 15% of global chip spending in 2009; next year they’ll move up to 20% — a collective increase of nearly $5.5B spending.