Caris Sees No Rebound in Site For Semi Equipment Buying

Suppliers of equipment to semiconductor makers – firms such as Applied Materials (AMAT) – will “remain in a trading range” over the next twelve months as the economy crimps an equipment spending rebound, so says a report this morning from Caris & Co. chip equipment analyst Ben Pang. Expectations are for equipment purchasing to be down 35% to 45% in 2009, after a 30% drop this year, says Pang, at around $15 billion to $17 billion globally. The issue is whether a sustained spending rebound can happen once new equipment orders have bottomed. He’s dour on the matter, noting that there are two potential scenarios: Either steep capital spending cuts start to crimp supply, and an economic recovery helps drive that spending surge, or else weak economic growth and lack of profitability at semiconductor makers hold back spending. “We think there is much higher probability for the second scenario to develop in 2009,” he writes. Adding to the pain, bailouts for DRAM makers, such as the one announced for Germany’s Qimonda (QI) last week, will continue to put pressure on profits in the DRAM chip business, delaying a recovery there, and, hence, pushing out spending on new equipment by Qimonda and others. Moreover, there’s no hot new technology in chip manufacture that would itself drive material spending increases on new equipment, as there was in past downturns. “Extreme Ultra-Violet” technologies will not emerge any time soon, writes Pang.