LONDON — The global installed capacity for the manufacture of semiconductors is set to decline by about 2.5 percent in 2009, mainly due to wafer fab closures, according to industry body Semiconductor Equipment and Materials International (SEMI).

The installed capacity is then expected grow by 4.5 percent in 2010 taking it to 2 percent above 2008 capacity.

Based on promising demand forecasts and drives to obtain market share, capacity investment plans were much more aggressive one year ago, with installed capacity projected to approach 19 million wafers per month (wpm) by the end of 2010. Since then many leading semiconductor companies have changed plans with many projects pushed out, put on hold or even cancelled. SEMI is now projecting only about 16 million wpm capacity by end of 2010, a reduction of 3 million wpm from projections one year ago.

"If demand starts to accelerate, in line with an economic recovery, capacity will simply not be able to keep pace given the currently projected low-levels in capital spending," SEMI said.