Electronics industry weathered Japanese earthquake well: Gartner

The global semiconductor and electronics industry has weathered the Japanese earthquake without much damage, IT market research firm Gartner said.

In its update on the market for semiconductor capital equipment (equipment used to make chips,) it said that it has not had to revise its projections for the market downwards, as feared in the aftermath of the disastrous Japanese earthquake and the Fukushima nuclear leak.

“Thanks to herculean efforts by Japanese vendors, the effects of the quake were minimized,” said Klaus Rinnen, managing vice president at Gartner, noting that Gartner’s forecast for the semi-conductor industry remains more or less as it was at the beginning of the year.

Unlike most other industries, the future health of the semi-conductor industry can be quite accurately predicted by looking at how big companies, such as the Taiwan Semiconductor Manufacturing Company (TSMC), Intel etc. are investing in their manufacturing capacity. Semiconductor industry has a very long gestation period and investments have to be made as much as 3-5 years in advance for increasing production or changing the nature of the product.

The electronics industry, of which semiconductor forms the biggest and most crucial chunk, is the world’s largest industry, estimated at trillions of dollars per year.

According to Gartner, the spending on capital equipment that make semiconductors itself is projected to reach $44.8 billion this year, substantially higher than $40.6 billion during 2010.

It however, pointed to an oversupply of semi-conductor factory (foundry) capacity by the end of the year, leading to a slight slow down in capital expansion during 2012.

“Semiconductor capital equipment spending in 2012 will see a 2.6 percent decline, followed by 8.9 percent growth in 2013. The next cyclical decline should begin in late 2013, as the impact of memory oversupply takes its toll,” it said.