June 25, 2012 — Worldwide wafer fab equipment (WFE) spending will total $33 billion in 2012, down 8.9% from 2011’s $36.2 billion spending level, say Gartner Inc. analysts. Chipmakers will spend more than $35.4 billion on WFE in 2013, ramping 7.4% over this year. See Gartner’s total capex expectations here.
WFE spending started off strong in 2012. “Foundries and other logic manufacturers ramped up sub-30-nm production,” said Bob Johnson, research vice president at Gartner. New equipment demand was stronger than originally anticipated, he explained, because of high demand for leading-edge devices. Yields at these nodes had yet to mature. As yields improve, demand for new logic production equipment will soften, weakening WFE demand for the tail end of 2012. Expect capital spending restraints through H2 2012 to weigh down new capacity additions; overall utilization rates will return to normal levels at the start of 2013.
Wafer fab manufacturing capacity utilization fell into the mid-80% range by the middle of 2012. Expect utilization rates to slowly increase to about 87% by year’s end. Leading-edge utilization will return to the high-80% range by H2 2012, and move into the low-90% range through most of 2013, supporting a positive capital investment environment.
Following an inventory correction earlier in the year, production returning to “more-normal levels,” said Johnson. “Increased demand, combined with less-than-mature yields at the leading edge, is consuming increased capacity, with the result that utilization will begin to climb upward again in the second quarter of 2012.”
The semiconductor industry was ramping up different technology nodes in 2011, which continued in 2012, driving a broad spectrum of equipment segment sales. Foundry is ramping up 28nm, leading-edge logic has transitioned to 20nm, NAND flash will ramp up the 1X node, and DRAM will be ramping up 4X and 3X nodes. Gartner analysts expect equipment manufacturers to face different issues at each node, a taxing prospect.
Additional information is available in the Gartner report, "Forecast: Wafer Fab Capacity Picture for Top Capital Spenders, Worldwide, 2010-2013, 2Q12 Update." This forecast report is on Gartner’s website at http://www.gartner.com/resId=2055915.
Gartner Inc. (NYSE: IT) provides information technology research and advisory services. For more information, www.gartner.com.