Recovery in both semiconductors and equipment has begun from lows reached in early 2009. However, as shown below, semiconductor sales (dotted line) are nearly back to where they were in September 2008 when the downturn in the industry started. Revenue in October 2009 was down only 5.5% from the September 2008 level.
On the other hand, semiconductor-equipment sales in November 2009 are down 42.3% from levels reached in March 2008, the start of the downturn in the equipment market.
As I noted in my TheStreet.com column on July 27, 2009, "In January 1995, 11.4% of revenue generated by semiconductor manufacturers was spent on new processing equipment. Forward to May 2009 and only 3.8% of semiconductor revenue was spent on equipment." Through October 2009, that figure is now at 3.4%.
There have been very bullish forecasts about the semiconductor-equipment market for 2010 in recent weeks. SEMI (Semiconductor Equipment and Materials International) issued a press release on Dec. 1 forecasting a 53% increase in 2010 following a 46% decrease in 2009.Gartner issued a release on Dec. 11 forecasting a 56.6% increase in 2010 following a 48.1% decrease in 2009. Both forecasts are based on technology purchases for 2010. SEMI in a different press release suggested that there will be no new fabs built in 2010 and pointed out that there were also no new fabs built in 2009. These comments beg the question how will the equipment market grow 50+% in 2010 with no new fabs and no new capacity additions when it dropped nearly 50% in 2009 with no new fabs and no new capacity additions?