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Semiconductor manufacturers to cut capital investment in 2012

Declining demand means chip manufacturers likely to cut capital spending in 2012

Semiconductor manufacturers are predicted to spend $51.7billion on capital equipment in 2012, almost 20% lower than the projected spend in 2011, according to analyst Gartner.

Gartner expects the slowdown to last for the first half of 2012, by which time it believes supply and demand should be in balance with the semiconductor market. Once that position is reached, Gartner says dram manufacturers and foundries will need to begin to boost their investment in order to be prepared for increased demand as markets rebound. As a consequence, Gartner believes capital spending in 2013 will increase by 19.2% to $61.6bn.
According to Klaus Rinnen, Gartner's managing vp: "Natural disasters and the economy have certainly impacted the semiconductor capital equipment market in 2011, but we expect equipment spending to increase 13.7% in 2011. However, equipment providers will not be as lucky in 2012; the impact of the slowing macro economy, high inventories and a sluggish pc industry – due to both weak demand and the flooding in Thailand – will temper the outlook for 2012."

Author
Graham Pitcher

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http://www.gartner.com

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Gartner Ltd

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