Semicon West Show: Conditions Much Worse than 2001

July 7, 2009
As the Semicon West show kicks off, the semiconductor manufacturing equipment industry is in a midst of a ferocious downturn.
Semicon West,

Suppliers are bailing out and looking desperately for customers in other industries. Semiconductor-equipment makers have gone through waves of layoffs and see few “green shoots” of new business.

Sound like a description ripped from today’s headlines? Guess again. This is how it was for semiconductorequipment makers in the last big downturn of 2001 and 2002.

Things are even worse today. “You are looking at a decline in spending of 50 to 60% compared to 2008. That will bring semiconductormanufacturing equipment spending levels down to what they were in the early 1990s,” says Dan Tracy, senior director of industry research and statistics at SEMI, the overarching organization for the semiconductor industry. “That’s steeper than the decline in 2001,” he says. Back in 2001, equipment spending totaled $28 billion globally. For equipment makers, the decline extended into 2002 and got down to $20 billion, Tracy says. “This year, they are looking at a 12 to 14 billion-dollar equipment market. For comparison, the industry spent $10 and $15 billion in 1993 and 1994, respectively,” he says.

The news doesn’t get much better for solar-manufacturing equipment. Tracy says the smart money is betting that 2009 will likely be flat or lower than 2008 in new module-making capacity partly because of difficulties getting financing.

But equipment makers are indeed seeing a few signs of life. Based on sales activity from chip foundries and packaging houses, orders should begin ticking up by the end of the year, says Tracy. “It appears the market for device manufacturers bottomed in January and February,” he says. “Now there are signs things are picking up month by month. Business fell so steeply late last year and early this year that it will take time for the industry to begin filling out its fab and packaging houses. When that begins to occur, we’ll start to see stronger response for sales and orders for equipment.”

Tracy expects test and assembly equipment to be the first areas to turn around, but from levels at their lowest since SEMI started tracking sales and orders in 1991. One bit of stimulus equipment makers can expect is in capital spending for 32-nm fab production. “There are increases in capacity planned in that area into 2010. A good part of that is related to Intel’s efforts to upgrade its fabs, as was announced in the spring,” says Tracy. “Compared to the rest of the industry, Intel’s spending has been pretty stable this year.”

Though financing problems continue to hamper new solar installations, there still is a lot of activity in solar manufacturing. Intersolar North America and The North American Photovoltaic Manufacturing Conference will be part of this year’s Semicon West activities. The events will include presentations by PV industry leaders, technologists, and policy makers and will cover such issues as thin-film and polysilicon manufacturing challenges, the outlook for PV equipment and materials manufacturing, and how to leverage display and semiconductor manufacturing technology for the photovoltaic industry.

Other themes at the show include challenges for microelectronics manufacturing beyond 2010, new paradigms for packaging and test, integration across the supply chain, and a packaging summit.

In all, over 600 exhibitors will attend this year’s Semicon West, which begins on Monday July 13 in San Francisco’s Moscone Center.

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