Semiconductor Equipment Sales Decelerating Rapidly

While suppliers of production equipment to the chip industry have enjoyed a strong demand for their wares over the past several years, the latest quarterly EquipmentFutures(TM) report sees previous double-digit sales growth rates quickly decelerating to a single-digit rate sooner than previously forecast.

The quarterly updated forecast offered by Strategic Marketing Associates (SMA) and Wright Williams & Kelly, Inc. (WWK), projects annual sales growth to decelerate to about a 5.0 percent rate by mid-2007 followed by a more attractive cumulative growth rate of about 17 percent per year over the next four years. Distinguishing itself from other industry forecasts, EquipmentFutures takes into account not only semiconductor and equipment sales but also end market demand.

“Although June quarter equipment sales were up nearly 60 percent compared to the same quarter a year ago, we anticipate a more rapid deceleration to single-digit sales growth by mid-2007,” said George Burns, SMA president. He noted that the semiconductor industry continues to follow historical cyclical growth patterns dating back to 1976, adding that current market research still supports equipment sales strengthening by mid-2008 as chip makers add production equipment required to support the most advanced process technologies.

EquipmentFutures Report
The report is structured to track six individual equipment groupings, namely: lithography, chemical mechanical polishing (CMP); etch & clean; implant & thermal processing; metal deposition; and non-metal deposition. The just updated outlook reports:

  • Of the six equipment groupings tracked, all will continue to grow over the five-year forecast but at a lower rate.
  • Flash memory content in consumer electronics will be a primary growth driver for the semiconductor industry.
  • Consumer electronics is forecast to grow at an average annual growth rate of about 19 percent over the next five years, over a percentage point higher than the average annual growth rate forecast for equipment sales.

According to Daren Dance, WWK vice president of technology, “Our quarterly outlook offers an essential strategic planning tool for suppliers of production equipment and materials as well as chip makers. Financial analysts who need to track leading market indicators in the semiconductor industry can also benefit from this unique set of reports.” He noted that the impact of the International Technology Roadmap for Semiconductors (ITRS) and other market considerations are included as important inputs to the forecast. Subscriptions to the quarterly EquipmentFutures Report may be ordered though the SMA website.

In addition to jointly producing EquipmentFutures, SMA and WWK individually publish other timely information products that are pertinent to the semiconductor industry. SMA offers several Excel spreadsheets updated quarterly, including its flagship FabFutures(TM) Report that details expenditures for more than 200 wafer fabs historically and over the next 6 quarters. WWK publishes “Applied Co$t Modeling(TM)” – a quarterly newsletter focused on the application and use of cost modeling tools and related topics.

About Wright Williams & Kelly, Inc.
With more than 3,000 users worldwide, Wright Williams & Kelly, Inc. is the largest privately held operational cost management company serving technology-dependent and technology-driven companies. WWK maintains long-term relationships with prominent industry resources including International SEMATECH, SELETE, Semiconductor Equipment and Materials International (SEMI), and national labs and universities. Its client base includes most of the top 20 semiconductor manufacturers and equipment and materials suppliers as well as leaders in nano-technology, MEMS, thin film record heads, magnetic media, flat panel displays, and solar panels.

About Strategic Marketing Associates
Strategic Marketing Associates is the semiconductor industry’s leading market research company focused solely on the wafer fab. Since 1992, SMA has provided its subscribers with comprehensive and accurate data about all aspects of the fab business plus insight on key trends. SMA provides a suite of information products covering wafer fabrication costs, fab capacity, technology, products, locations and closure plans. Additionally, Strategic Marketing Associates has compiled the industry’s most comprehensive and advanced fab database, World Fab Watch, that features a complete listing of the world’s fabs and their characteristics. SMA reports are widely read by semiconductor manufacturers, equipment and materials companies, fab construction companies and financial analysts.