JANUARY 9--As the overall semiconductor market suffered the worst decline in its history in 2001, the worldwide semiconductor capital-spending and equipment markets revenue declined by 29% and 37%, respectively, according to preliminary statistics by Dataquest Inc., a unit of Gartner Inc. (San Jose, CA; www.gartner.com). Worldwide semiconductor capital spending totaled $44.4 billion in 2001, a 28.9% decline from 2000. Semiconductor equipment spending declined 36.8%, from $39.9 billion in 2000 to $25.2 billion in 2001.
"The manufacturing challenges in the industry were readily apparent in 2001," said Klaus Rinnen, chief analyst and director of the Gartner Dataquest semiconductor manufacturing group. "As demand weakened and capacity utilization decreased, financial considerations became foremost in everyone's mind. Thus, capital expenditures took a back seat to everyday production needs."
Gartner Dataquest analysts believe 2002 will be the transition year to recovery, with the most likely scenario of a sustainable recovery for the semiconductor device and capital-equipment industries occurring in the second half of this year. Demand is extremely weak in the equipment market, but Gartner Dataquest forecasts an acceleration in capital-equipment spending driven by a tightening of leading-edge capacity in the second half of this year. Still, it will not be enough to contain the decline in equipment spending, as the market is forecast to decline 19% in 2002.
Capital spending cuts occurred in all regions during 2001. Led by foundries and DRAM, Asia/Pacific companies cut deepest at nearly 47% decline, with Taiwan cutting deepest by over 50%. US and European companies curtailed spending by 21% and 26%, respectively. Japanese companies cut spending by about 18%. As overcapacity remains rampant in 2002, capital spending restraints will continue with further cuts of about 24% this year. There is a glimmer of hope that foundry providers might cut some spending loose before year's end, providing an upside to spending.