If you look at the different chart below, you will see how the semiconductor market (line) has continued to rebound after 2000 while there has been quite a divergence between semi and equipment revenue since that time, compared with pre-2000.

Recovery in both semiconductors and equipment has begun from lows reached in early 2009. However, semiconductor sales (dotted line on the chart) 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.

The answer to the problem is that semiconductor manufacturers need to spend.

According to IC Insights, the $1 billion cap-ex spenders include the following firms in 2010: Samsung ($6 billion); Intel ( INTC) ($5.3 billion); Taiwan Semiconductor ( TSM)($3 billion); Hynix ($2 billion); Toshiba ($1.95 billion); GlobalFoundries, a partnership that includes Advanced Micro Devices ( AMD)($1.9 billion); Micron ( MU) ($1.3 billion); Nanya ($1.1 billion); and Elpida ($1 billion).

-- Written by Robert Castellano in New Tripoli, Pa.
Robert N. Castellano, Ph.D, is President of The Information Network, a leading consulting and market-research firm for the semiconductor, LCD, HDD and solar industries. Castellano is internationally recognized as one of the leading experts in these areas. He has nearly 25 years of expertise as an industry analyst. Castellano has provided insight on emerging technologies to many business and technical publications, including Business 2.0, BusinessWeek, The Economist, Forbes, Investor's Business Daily, Los Angeles Times Magazine, The New York Times, USA Today and The Wall Street Journal. He is a frequent speaker at conferences and corporate events. He has over 10 years' experience in the field of wafer fabrication at AT&T Bell Laboratories and Stanford University before founding The Information Network in 1985. He has been editor of the peer-reviewed Journal of Active and Passive Electronic Devices since 1985. He is author of the book "Technology Trends in VLSI Manufacturing," published by Gordon and Breach. His book "Solar Cell Processing" was published in 2009 by Old City Publishing. He received his Ph.D. in solid state chemistry from Oxford University.

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