Fri, Sep 27, 2013 - Page 14 News List

Declining mobile market hits equipment purchasing

Staff writer, with CNA

Spending on manufacturing equipment by the world’s integrated circuit (IC) companies this year is expected to fall 8.5 percent from last year, reflecting a decline in the mobile phone market, a research report said on Wednesday.

In the report, Gartner Inc said IC manufacturing equipment spending is expected to total US$34.63 billion this year, down from US$37.83 billion last year.

CELLPHONE DEMAND

Weakening demand for mobile phones has prompted many chipmakers to cut their investments in the advanced 28 nanometer technology process, Gartner said.

Under such unfavorable circumstances, capital spending of the global semiconductor sector for this year is expected to fall 6.8 percent from last year to US$54.77 billion, it said.

The research firm said weakness in the global semiconductor market continued into the first quarter of this year from last year, which prompted IC companies to cut their expenses, including to their equipment purchasing budgets.

FUTURE EARNINGS

“However, semiconductor equipment quarterly revenue is beginning to improve and positive movement in the book-to-bill ratio indicates that spending on equipment will pick up in the remainder of 2013,” Gartner analyst Dean Freeman said in a statement.

The book-to-bill ratio is used to evaluate the health of the high-tech industry, measuring new orders against products sold every month. A high ratio shows a backlog of orders that should generate sales and earnings in the future.

According to Gartner, sales by the world’s IC industry for this year are expected to grow 5.2 percent to US$315.39 billion.

THREE LEADERS

Three major chipmakers — Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), US-based Intel Corp and South Korea’s Samsung Electronics Co — are expected to account for more than half of the capital spending in the global IC industry this year, Gartner said.

In April, TSMC, the world’s largest contract chipmaker, announced an increase in its capital expenditure this year to between US$9.5 billion and US$10 billion from a previously planned US$9 billion.

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