Global spending on semiconductor manufacturing equipment is expected to rise by 46.8% in 2010 compared to 2009, says iSuppli, ending three consecutive years of decline.
“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 utilisation,” says Len Jelinek, director and chief analyst for semiconductor manufacturing at iSuppli.
“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.”
Global semiconductor manufacturing capacity fell 18% in Q408, and a further 45% in Q109, says iSuppli. However, in Q209 it rose 44.9%, and it rose another 16% in Q3. In Q409, capacity held steady with Q309.
Fab utilization was 70% in Q209 – a 45% increase on Q109 – 80% in Q3 and Q4, says iSuppli.
“Because of the rise in utilisation and signs of market recovery, semiconductor manufacturers late in the fourth quarter finally became willing to make decisions that would result in expanding their capacity,” Jelinek said, “these decisions will require new equipment purchases, spurring rising sales of semiconductor manufacturing equipment.”
iSuppli anticipates that manufacturing run rates in the second half of 2010 will continue to drive up total factory utilisation. The utilisation rate is expected to continue to rise and peak at 87% in Q3 2010 before declining slightly to 86% in Q4 2010.
The largest year-over-year increase in capital spending in 2010 will be for the manufacturing of memory products. iSuppli anticipates that spending in support of memory manufacturing will increase by 65.5% in 2010.
“Manufacturers will find 2010 to be a year of recovery and expansion,” says Jelinek.