Gartner has warned that spending on semiconductor capital has collapsed, and is not likely to recover until 2010.

The analyst firm found that spending on capital equipment has dropped by over a quarter in the past year, from $63bn to $47bn. Gartner estimates that spending will drop by another eighth in 2009 before bottoming out in 2010.

"The excess spending of 2006 and 2007 has hit home in 2008, and the semiconductor equipment industry will continue to feel the pinch well into 2009, " said Dean Freeman, research vice president for Gartner's semiconductor manufacturing group.

"Oversupply in the memory sector, and a slowdown in consumer spending due to the economic crisis in most of the G8 economies, are having an impact on consumer electronics consumption, which in turn impacts foundry and integrated device manufacturer spending."

Companies including AMD, Intel, IBM and others are spending money on progressively smaller transistor sizes, but this is being accompanied by lower levels of output. Overall spending on wafer technology dropped by 26 per cent in 2008.

The only bright spot in the market is in Asia, which will have increased its share of the market from 71 per cent to 76 per cent by 2012, according to Gartner.