Semiconductor spending on the up

After two difficult years, worldwide semiconductor equipment spending is on the up and set to return to positive growth this year.

Analyst firm Gartner has said there are signs that the industry has started to move forward again.

Gartner forecast that worldwide semiconductor capital spending will total $29.9bn (£18.3bn) in 2003, a 7.9 per cent increase on figures from 2002. Last year capital spending suffered a 37.9 per cent decline.

All other segments of the semiconductor capital equipment market are also on pace for increased spending in 2003. In 2002, all of these segments suffered revenue declines of at least 21 per cent.

"On a regional basis, Japanese companies are most aggressively raising spending this year with a possible increase of 25 to 30 per cent over 2002, funding newly restructured ventures," said Klaus-Dieter Rinnen, managing vice president for Gartner's semiconductor manufacturing and design research group.

"DRAM has been strong so far, led by Samsung's aggressive plans to increase spending by more than 50 per cent over last year. Foundry is the wild card. We expect foundry growth to be flat in 2003, but this can change in the blink of an eye."

The analyst added that worldwide wafer fab use is on the rise, with semiconductor unit demand closing in on the peak levels of 2000.

"In the second half of 2003, we anticipate utilisation rates to rise further," Rinnen said. "Overall utilisation should cross the 85 per cent mark during the second half of the year. Leading-edge utilisation should end the year at a projected 95 per cent.

Worldwide foundry revenue in 2003 is forecast to increase by 23 per cent, driven largely by increased wafer shipments, while wafer prices are expected to be up only slightly.

Wafer demand is coming primarily from the consumer and PC sectors, and Gartner expects a PC upgrade cycle to emerge in the second half of 2003, although it may start slowly.