Chip equipment market slumps

Asian companies will remain the top buyers of chip-making equipment for the foreseeable future despite a slowdown in purchasing, new research predicts.

Global spending on chip manufacturing equipment will fall 20 per cent to $34.1bn this year before recovering next year, according to forecasts from SEMI, a semiconductor manufacturing industry association.

The industry builds machines and other equipment used to make semiconductor devices such as CPUs, LCD screens, graphics chips and memory chips.

"We began to see equipment spending declines during the second half of 2007, driven by lower spending in the memory sector and a less than favourable device pricing environment," said Stanley T Myers, president and chief executive at SEMI.

"But expectations for 2009 are leaning toward a solid industry recovery and subsequent growth in the low double digits."

However, the industry's value is not expected to approach the $42.7bn spent in 2007 before 2010.

The sharpest fall in spending in a major chip making nation this year is expected in Taiwan, where SEMI predicts expenditure to plunge 37 per cent year-on-year to $6.75bn.

Despite this, Taiwan is expected to be the second biggest spender behind Japan, which will spend $7.88bn.

Taiwan is expected to regain the top spot next year with a surge in spending to $10.32bn, more than a quarter of the global total.

Taiwan is home to two of the world's largest chip makers, Taiwan Semiconductor Manufacturing and United Microelectronics, as well as major manufacturers of memory chips and LCD screens.

China is the only significant market where spending will not fall this year, SEMI expects. Current forecasts suggest a growth rate of one per cent in that market.

Spending in North America and Europe is also predicted to fall this year, down 13 per cent and 14 per cent respectively.