(By Balachander) Global wafer fab equipment (WFE) spending is expected to decline 17.4 percent this year and 9.7 percent in 2013, according to market research firm Gartner Inc.
Gartner projects the market to return to growth in 2014.
The firm forecasts worldwide wafer fab equipment spending to total $29.9 billion this year and $27 billion in 2013.
Gartner said that the outlook for semiconductor equipment markets has softened due to macroeconomic weakness and that capital investment is expected to remain flat over the forecast period as memory and logic segments invest countercyclically to each other.
"Demand for new equipment for logic production will soften as yields improve, leading to declining shipment volumes as the industry heads into 2013," Gartner said.
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Gartner projects that wafer fab manufacturing capacity utilization will drop below 80 percent by the end of 2012 before slowly increasing to about 85 percent by the end of 2013. Memory will continue to be weak through 2013.
"High inventories, combined with overall market weakness, will continue to depress utilization rates into the first half of 2013," said Bob Johnson, research vice president at Gartner.
Johnson expects utilization rates to start climbing upward in the second quarter of 2013, as demand for chip production returns and capital spending restraints in the second half of 2012 and first half of 2013 slow new capacity additions.
Gartner now expects capital spending to decline 10.7 percent this year, sharper than a 9.3 percent drop projected earlier. Capital spending is expected to drop an additional 14.7 percent in 2013 as semiconductor manufacturers deal with excess capacity and a slow macroeconomy.