Fab spending expected to grow 64% in 2010
SEMI forecasts increased fab spending for 2010 but says capacity will stay stagnant.
By Suzanne Deffree, Managing Editor, News -- EDN, September 4, 2009
Six companies will lead an expected 64% year-over-year growth in fab spending in 2010, according to a recently released SEMI report.
In its World Fab Forecast, SEMI predicted the growth will push fab spending to $24 billion next year, about $14 billion of which is expected to come from a handful of companies that the organization has dubbed the "Fantastic Six." SEMI described the six -- TSMC, GlobalFoundries, Toshiba, Samsung, Intel, and Inotera -- as having "ambitious investment plans."
"During this unprecedented downturn, it is truly fantastic when companies plan large investments during a recession year," Christian Dieseldorff, senior analyst at SEMI, said in a research note on the report. "SEMI research indicates that six companies are expected to invest large amounts of money over the next two years while battling economic challenges."
According to SEMI, TSMC has upped its capex twice in 2009, with the second increase at the end of July bringing the top foundry's estimate to $2.3 billion. TSMC’s capex is also projected to be above $2 billion in 2010 as demand for semiconductors continues picks up and as the global economy moves out of recession, SEMI said.
GlobalFoundries, the AMD spun off manufacturing company, has received investment commitments from its partner, Advanced Technology Investment Company (ATIC). After investing $2.1 billion to purchase its stake in the foundry, ATIC has committed additional equity funding of $3.6 billion and up to $6 billion over the next five years to fund the expansion of GlobalFoundries. The foundry’s capex is expected to be about $600 million to $700 million in 2009, and may reach more than $1 billion for each of the next two years, SEMI estimated.
Meanwhile, NAND-focused Toshiba in June began to raise $3 billion in global stock offerings to invest in its factories. Toshiba’s total capex plan is approximately $11.5 billion (1100 billion yen) from fiscal year 2009 to 2011.
As Samsung converts and upgrades its lines, SEMI estimated the company's 2010 capex at about $4 billion to $5 billion.
Intel is also upgrading and earlier this year announced that it would spend $7 billion over the next couple of years to advance existing facilities for 32-nm technology production. On that, SEMI projected Intel will spend $3 billion to $4 billion of the amount in 2009 and the remainder in 2010.
And Inotera, the joint venture between NanYa and Micron, announced a $1.6 billion project to convert all its fabs from 70-nm trench to 50-nm stack capacitor technology, using immersion lithography tools. Equipping of the fabs is expected to start by the end of this year and extend into the next, which may contribute about $1 billion to fab spending in 2010, SEMI said.
High, but still low
Still, even with the planned spending, SEMI cautioned that its estimated 64% growth will follow on severe declines in 2009.
"The increase of 64% appears high but we need to consider that this increase is against historic lows in 2009," Dieseldorff said.
Comparing 2010 spending numbers against 2008, SEMI noted that growth rates would appear negative. In fact, total fab spending in 2010 will remain at its lowest levels since 2003, when about $22 billion was spent, the group pointed out.
Moreover, SEMI noted that most of the 2009 and 2010 investments will go to upgrade fabs rather than invest in new fab capacity. In 2010, the region spending the most on construction projects will be the Americas, according to SEMI. For equipping facilities, the Americas also lead, followed by Taiwan and Korea, the group said.
"The economic downturn has taken its toll on worldwide capacity," Dieseldorff said. "Along with the lethargic spending in 2009, a lot of capacity was also taken off line. According to the SEMI World Fab Forecast data, about 31 fab closures are expected by the end of 2009, with another 16 likely to close in 2010."
Dieseldorff continued to state that the average fab utilization rate reported for the industry dropped in Q1 to about 56% with a range of 30% to 70% reported by individual companies. "Although a few companies (such as TSMC) are now running some fabs at 100% utilization, the overall utilization rate is still expected to lag at 70% to 80% by the end of 2009," he said.
Overall capacity growth is expected to slow to 4% to 5% in 2010, or about 21.5 million wafers per month in 200-mm equivalents.
