Gartner Dataquest is looking forward to growth in the wafer fab equipment market with 5.3% growth year-on-year expected in Q3 with revenues reaching $5.2bn. The whole year, however, will show a decline of 20% from $23.7bn in 2001 to $18.9bn this year. Semiconductor capital spending for 2002 is expected to be $35.3bn, down 20.9% on 2001's $44.6bn. The foundry sector will account for much of the increased spending this year. Lack of demand and overcapacity are still slowing the market with spending focused on new technology. Next year, capital spending is expected to reach $47.3bn, 34% up. Equipment buying will be worth $26.9bn, up 42.1%.

Gartner Dataquest is forecasting a 9% decline in the semiconductor packaging
and assembly market this year. This comes on top of a 56% fall in 2001 to
$2.981bn. Next year the market research company expects a 54% increase to
$4.191bn from 2002's $2.715bn. The second half of this year will show some
growth in packaging revenues for power and discrete devices, driven by the
portable markets. Difficult market conditions are expected to lead to
consolidation with many second- and third-tier companies failing through
excess capacity and lack of capital.
On the equipment side, packaging lithography and flip-chip bonding are
expected to show growth this year of 15% and 21%, respectively.

Merill Lynch analyst Brett Hodess believes the likelihood of a "pause" in
semiconductor equipment orders in H2 has increased in the "past several
weeks". Hodess has not reduced his expectations of a 20% capital spending
cut this year, but has clawed back a projection of 30% growth next year to a
more modest 20-25%.

While Semico Research sees the sales growth for standard cell ASICs growing
at a 20.9% compound annual growth rate (CAGR) for 2001-2006, gate array
sales will be squeezed by programmable logic. Gate array CAGR is expected to
decline at 2.6% on a compound annual basis for 2001-2006.