The business climate for the semiconductor industry is deteriorating, and pushouts of front-end equipment are forthcoming, according to a recent report.
"Our proprietary global leading indicators had turned down," said president of The Information Network. "The hyper-growth already exhibited through first-half 2010 cannot be sustained because the poor macroeconomic climate could not support 100%+ equipment growth. Pushouts will dramatically affect the lithography sector which has been riding a wave of stellar levels of purchases primarily from Samsung."
As sales drop in electronic gadgets, the most pronounced effect will be in the DRAM sector where sales climbed 135% in the second quarter of 2010 compared to the first quarter of 2009. A slowdown in the PC market will also impact the DRAM market directly.
While the overall front-end market will suffer pushouts, the lithography sector will be impacted most, where sales of US$35 million immersion deep ultraviolet (DUV) tools have flooded the market of late.
Castellano noted that "2010 is becoming very reminiscent of 2000, where poor inventory control, fear of IC shortages, and concern over long waiting times for leading-edge equipment spelled disaster, and we ended the year with US$10 billion in excess IC capacity and a shattered equipment industry that took years to claw out of the red and has never fully recovered until this year"
"Forecasts for the semiconductor and equipment industries seem to get bigger with each monthly announcement, and the fragile economies of the Western world do not warrant such growth" .
However, equipment for niche markets and applications such as advanced packaging will not be affected by the pushouts, as they have not exhibited the hyper growth as mainstream ICs.