Semiconductor makers may cut worldwide capital-equipment investment by 19 percent next year, more than estimated earlier, as slowing economic growth causes sales to drop, according to research company Gartner Inc.
Industry spending on chip production capacity will total US$35.2 billion next year compared with an estimated US$43.5 billion this year, Stamford, Connecticut-based Gartner said in a report yesterday.
The drop is steeper than a 2.6 percent reduction that Gartner predicted in June. Investment cutbacks have already started and will last until the middle of next year, the research company said.
“The slowdown appears to be across the board,” Klaus Rinnen, managing vice president at Gartner, said in the note.
Investment in producing NAND-technology chips has also “softened” because of weaker-than-expected growth in manufacturing tablet devices, he said.
Gartner reversed its forecast for industry-wide sales of semiconductors for this year on Sept. 15, predicting a 0.1 percent decline instead of an increase.
Excess electronics inventory and “poor” chip volume are to blame for the capital spending decline, it said yesterday. Supply and demand will be more in balance by the middle of next year, and the next growth year will be 2013, with an 22 percent increase in equipment investment, Gartner said.
The Gartner report came as Micron Technology Inc, the largest US maker of computer-memory chips, on Thursday posted a fiscal fourth-quarter loss on weak PC demand.
The company’s net loss was US$135 million, or US$0.14 a share, compared with a profit of US$342 million, or US$0.32, a year earlier, the Boise, Idaho-based Micron said in a statement. Revenue in the period ended Sept. 1 fell 14 percent to US$2.14 billion. Analysts surveyed by Bloomberg on average estimated profit of US$0.02 on sales of US$2.11 billion.
The price of DRAM, which provides the main memory in PCs, dropped as supply increased and demand from makers of laptops and desktop PCs remained sluggish.
“It looks pretty bad,” said Daniel Berenbaum, an analyst at MKM Partners LLC. “It used to be if you got supply right, you were fine. Now there seems to be something wrong with demand.”
Micron is the only remaining US-based maker of DRAM after Asian manufacturers forced out the pioneers of the industry, such as Intel Corp and Texas Instruments Inc. Producers’ inability to match supply to demand in DRAM has hurt earnings as prices for the chips, which are traded on commodity exchanges in Asia, often fell below the cost of production.
“The PC business is not super strong going into the holidays,” Mark Adams, Micron’s head of sales, said on a conference call with analysts on Thursday. “The consumer business seems off on the demand side.”
For the current fiscal year, Micron reported net income of US$167 million, or US$0.17 a share. Before yesterday, Micron had reported an annual profit in only four of the past 10 years.
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