Equipment Market Drifts Downward

Most analysts covering the equipment market have dropped their forecasts, some by as much as half, since the start of the year. While there are a number of variables that could ultimately change those numbers—the Greek debt crisis, currency fluctuations, server sales, the delivery of a commercially viable EUV—the bottom line is that the market is looking more skittish.

Dan Tracy, SEMI’s senior director of industry research and statistics, put total growth at 7.1% this year, with 4.1% growth in 2016. He broke the forecasts down into several discrete areas:

1. Wafer shipments. The number of wafer shipments is up 8% year over year, but the companies creating those wafers have been reporting single-digit revenue. That leaves them in a weaker position to invest in more capacity. Couple that with an expected slowdown in shipments in the second half, and the overall number looks more like 5% to 6% for the full year.
2. Equipment spending. The prediction is for a slight drop in North America, Taiwan and China, with an increase in Korea due to DRAM and 3D NAND. Test equipment, assembly and packaging are expected to drop 3% year over year to $3.5 billion, while front-end wafer processing equipment is expected to grow 10% to $32.1 billion. However, this pales in comparison with an 18% growth rate in 2014.
3. Billings and bookings. Bookings were down about 3.7% in the beginning of the year, but are expected to increase in the second half, according to Tracy. Billings, meanwhile, are expected to increase in Taiwan. One unknown factor is currency fluctuations, which already has impacted Japan.

On a global basis, China equipment purchases are expect to increase 6.6% in 2015 and 18.9% in 2016. Europe is expected to increase from 13.9% in 2015 to 25.8% in 2016, although that could be impacted by the Greek debt crisis and the overall Eurozone economy. Korea is expected to grow 25% this year, 7.9% next year. North America will likely be down 21% this year, but up 3.9% next year. And Taiwan is expected to grow 15.7% this year, down 8.2% next year.

The Taiwan equipment market—notably TSMC and UMC, as well as the OSAT community—is one of the key bellwethers for equipment. It remains the largest single market for equipment sales. In 2015 that market will consume $10.9 billion in equipment, according to SEMI. South Korea is second with $8.6 billion, followed by North America at $6.5 billion.