Research firm Gartner Inc. (search) Thursday raised its forecast for global spending on chip-making equipment in 2005, targeting a milder decline as large chip makers maintain investments in advanced manufacturing technologies.

Sales of the tools that build, package and test chips are now expected to decline 11.6 percent this year to $33.2 billion, Gartner said in a quarterly update to its forecast. Previously, the firm had targeted a 15.3 percent decline.

As global chip makers, led by Intel Corp. (INTC) and Samsung Electronics (search), brace for a flat year of sales, spending on chip-making equipment appears to be in the middle of a multi-year lull. Equipment spending will decline another 6.5 percent in 2006, before recovering in 2007 and 2008, according to Gartner's forecast.

Despite the expected decline, chip equipment makers — including industry leaders Applied Materials Inc. (AMAT) and Tokyo Electron Ltd. (search) — face a far more benign contraction than during the last downturn of 2001 and 2002, when sales plummeted nearly 40 percent and 30 percent, respectively.

"Rather than having the sharp annual contractions of the past, this cycle will be milder," said Klaus Rinnen, the semiconductor manufacturing analyst for Gartner, in a statement.