Bloomberg News

Semiconductor Investment Decline to Accelerate, Gartner Says

September 30, 2011

Sept. 30 (Bloomberg) -- Semiconductor makers may cut worldwide capital-equipment investment by 19 percent in 2012, 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 $35.2 billion next year compared with an estimated $43.5 billion in 2011, Stamford, Connecticut-based Gartner said today in a report. The drop is steeper than a 2.6 percent reduction that Gartner predicted in June. Investment cutbacks have already started and will last until mid-2012, it 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 industrywide sales of semiconductors for 2011 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 today. Supply and demand will be more in balance by mid-2012, and the next growth year will be 2013, with an 22 percent increase in equipment investment, according to Gartner.

The Stoxx 600 Technology Index, led by German chipmaker Infineon Technologies AG, fell as much as 2.1 percent and was down 1.9 percent as of 10:58 a.m. in London. The index has declined 4.2 percent in September.

--Editors: Tom Lavell, David Risser

To contact the reporter on this story: Katie Linsell in London at

To contact the editor responsible for this story: Kenneth Wong at

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