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Chip equipment market set to rebound

Global spending on semiconductor manufacturing equipment will recover this year, rising 46.8 percent over 2009, iSuppli predicts.

Chip manufacturing equipment is yet another tech sector eyeing a recovery this year, according to projections from market researcher iSuppli.

Global spending on chip manufacturing gear will grow by 46.8 percent over 2009, according to the report released Friday. The growth will follow nearly three down years. This upturn could be good news for the tech industry. Makers of chip manufacturing equipment are often considered the proverbial canary in the coal mine for the rest of tech, because new orders often indicate a growing confidence in consumer or business spending.


The chip industry was hit by a particularly severe downturn in sales starting in the fourth quarter of 2008. That led to an 18 percent decline in the use of existing manufacturing equipment in the final quarter, iSuppli noted, followed by a more dramatic decline of 45 percent in the first quarter of 2009. Chipmakers were forced to cut capacity, which then boosted use of existing equipment by 45 percent in the second quarter and another 16 percent in the third quarter.

"As a result of conservative management of capacity, most companies ended 2009 with manufacturing levels approaching those of the pre-downturn levels of the third quarter of 2008," Len Jelinek, iSuppli's chief analyst for semiconductor manufacturing, said in a statement. "Because of the rise in utilization and signs of market recovery, semiconductor manufacturers late in the fourth quarter finally became willing to make decisions that would result in expanding their capacity. These decisions will require new equipment purchases, spurring rising sales of semiconductor manufacturing equipment."

The largest boost in spending will be in memory chip manufacturing equipment, which iSuppli expects will jump by 65 percent this year.