Semiconductor equipment sales have fallen from $54bn to $35bn in two years
China has failed to emerge as a chip manufacturing nation, to the surprise of industry analysts, says iSuppli, while 2009 will see worldwide spending on new IC manufacturing equipment fall to its lowest level for six years, knocking on the head plans for 450mm wafer development.
'China has been unable to establish a technological manufacturing base that requires the use of advanced technologies and expensive new semiconductor manufacturing equipment', says a new report from iSuppli.
Meanwhile, 2009 will see a 17.6 per cent fall in spending to $35.2bn, the lowest level since 2003's level of $33.8bn.
The 2009 decline succeeds a decline in 2008, which iSuppli estimates will be 21 per cent down on 2007.
Back in 2007, the semiconductor materials and equipment industry had sales of $54bn. Two years later, in 2009, it is expected to have sales of $35.2bn.
This year, sales of the sector started weak and go worse. "At the start of the second quarter, semiconductor equipment providers were still reeling from the sharp cuts in capital expenditures from the major memory chip suppliers," says Len Jelinek, director and chief analyst for semiconductor manufacturing at iSuppli, "because of this, capital expenditures in 2008 already were depressed, with virtually no semiconductor supplier continuing to spend at historical rates. However, by the end of the third quarter, market demand virtually stopped as global uncertainty driven by the threat of the collapse of the financial markets threw consumers into a tailspin. Companies throughout the electronic supply chain began to report declining sales and falling profits. The impact on semiconductor manufacturing was immediately apparent, with falling factory utilisations and significant reductions in capital spending, especially for capacity expansions."
For the device manufacturers, weakening demand meant raised the threat of over-capacity in Q208, but cut-backs in is spending looked as though they could balance supply and demand.
"Leading-edge chip manufacturers were rushing toward the 28/30-nanometer process technology nodes. In the background, the migration to next-generation, 450mm wafers was becoming a hot topic", said iSuppli, "however, all these expectations flew out the window as the severity of the economic and electronics downturn became apparent in the third quarter."
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