Semi Equipment 'Breather' Gets Wind Knocked Out

According to Semiconductor Fabtech, Gartner sees a bumpy road ahead for wafer fab equipment sales:

Although few believed that we would see similar growth levels in 2007, a combination of factors are at play that will result in a slight decline in spending compared to 2006. With unit demand still relatively strong but average selling prices in memory and microprocessors now affecting overall growth for the industry this year, spending at IDMs and foundries is not expected to be strong in the second half of the year. The result is that Gartner has lowered its wafer fab spending forecast to show a 0.7 percent decline compared with 2006. Though single digit growth had previously been expected by the market research firm, recent cutbacks by IDMs and restrained spending by foundries have taken their toll.

Back in December, the forecast was for equipment manufacturers to 'take a breather,' but that demand wouldn’t collapse. Our response at the time:

…end demand is even cooler than many industry watchers believe. With a slowdown in consumer spending on electronics looking increasingly likely for 2007, the orders will likely be pushed back further still. In other words, don’t hold your breath waiting for the industry’s “breather” to end.

As for the 0.7% decline currently being forecast, that just isn’t how the semi cycle works.

We’re much more likely to see double-digit declines sometime during this year than a shallow dip.