Semiconductor industry continues to take a battering

Gartner is not hopeful of a recovery in the semiconductor market this year

The semiconductor industry is facing a particularly tough 2009, according to the latest predictions from analyst firm Gartner.

The industry has already suffered under the global economic squeeze which has caused a dramatic downturn in capital equipment spending, and Gartner said that the situation will not improve any time soon.

Gartner's Forecast: Semiconductor Capital Equipment Recovery Possible in 2010 report predicts that worldwide capital equipment spending will hit $16.9bn (£12.2bn) in 2009, down 45.2 per cent from the 2008 figure of $30.8bn (£22.2bn).

"The dramatic crisis in world economics that came to light late in the third quarter of 2008, and fully engulfed the fourth quarter, slowed capital spending in all segments of the semiconductor market," said Klaus Rinnen, managing vice president for Gartner's semiconductor manufacturing group.

"The overspending on memory in the past three years, combined with a retrenching consumer market, presents little potential for an upside until 2010. "

Worldwide wafer fabrication equipment spending, which tumbled 31 per cent in 2008, is forecast to drop another 46 per cent in 2009.

Similarly, the packaging and assembly equipment market declined nearly 30 per cent in 2008, and is expected to fall by 47 per cent in 2009. However, some recovery for advanced process equipment could be seen in the second half of this year, said Gartner.

The automated test equipment market is projected to decline 34 per cent in 2009, and lithography is expected to be hit the hardest with a predicted 52 per cent decline.

As the report's title suggests, there may be hope for a slow recovery beginning in 2010, when overall spending is expected to rise by 20.1 per cent to $20.3bn (£14.6bn), surging close to 2008 levels in 2011 and exceeding them in 2012.