Semiconductor equipment buys to rebound in 2010, says iSuppli

Global spending on semiconductor manufacturing equipment is expected to rise by 46.8 percent in 2010 compared in 2009, aided by the chip industry’s lean supply chain, bringing an end to three consecutive years of decline, reports market researcher iSuppli Corp.

“After suffering through one of the most significant declines in manufacturing in the history of the chip making business in the first quarter of 2009, semiconductor makers were rewarded with three subsequent quarters of improved factory utilization,” said Len Jelinek, director and chief analyst for semiconductor manufacturing at iSuppli, in a statement.

“As a result of conservative management of capacity, most companies ended 2009 with manufacturing levels approaching those of the pre-downturn levels of the third quarter of 2008. With semiconductor revenue set to rise in 2010 due to the arrival of innovative new products and low inventory levels throughout the supply chain, the outlook for chip manufacturing is optimistic,” added Jelinek.

Due to economic uncertainty during 2009, global semiconductor manufacturing capacity began dropping in the fourth quarter of 2008, declining to 71 percent, down 18.1 percent from 87 percent in the third quarter, reports iSuppli. Utilization fell again in the first quarter of 2009, decreasing to 48 percent, down 44.9 percent from the fourth quarter of 2008.


iSuppli’s report, “Increased Semiconductor Demand Changes Manufacturing’s Perspective in 2010“, also finds that utilization rebounded in the second quarter, increasing 69 percent, up 44.0 percent sequentially. Utilization in the third rose another 15.9 percent in the third quarter to reach 80 percent, and held steady at that rate in the fourth quarter.

iSuppli expects the utilization rate to continue to rise and peak at 87 percent in the third quarter of 2010 before declining slightly to 86 percent in the fourth quarter.

The largest year-over-year increase in capital spending in 2010 will be for the manufacturing of memory products, which will increase by 65.5 percent in 2010, says iSuppli.

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