Oversupply and falling prices in the memory chip market have led to research company Gartner forecasting a 47 per cent drop in spending on DRAM manufacturing equipment in 2008.

Semiconductor companies are currently faced with unit prices far below cash costs. They also anticipate slower sales of memory chips in the next couple of quarters due to a weakening US economy, but predict things will pick up as supply and demand starts to equalise in late 2008 and early 2009.

“Reported DRAM spending plans have declined to the point where we are now projecting a drop of almost 47 per cent in DRAM spending and 29 per cent in total memory in 2008,” said Klaus Rinnen, managing vice president for Gartner's semiconductor manufacturing group in a statement.

Worldwide spending on semiconductor capital equipment is expected to total $47.5 billion (£24.1bn) in 2008, a 19.8 per cent decline from 2007.