Wafer Fab Equipment Purchases to Hit Highest Level Since 2000

Staff Reporter -- Electronic News, 7/10/2006

The market for semi production equipment and materials can look forward to growing 19 percent sequentially this year, as well as 10 percent next year, to reach $40 billion, the highest level since 2000, according to a report by industry research firm Strategic Marketing Associates (SMA) released at Semicon West today.

The forecast for strong double-digit growth for this year and next is being fueled by rising levels of new wafer fab construction that began in 2004 and is expected to crest in 2007, SMA noted.

"We see the industry bringing 35 new fabs online by end of 2007 with a total equivalent capacity, when fully ramped, of more than 2 million 200mm diameter wafers per month," SMA President George Burns said in a statement. "Representing more than 15 acres of silicon, this monthly output is roughly equal to 18 percent of industry's theoretical full capacity today."

As semi equipment and materials purchases top $40 billion in 2007, the firm added, overall capital spending by wafer fabs worldwide is expected to reach an all-time high of $62 billion.

Most of the new capacity and spending will be for processing 300mm diameter wafers, especially to meet demand for DRAM and flash memory, the firm said.

Led by the Toshiba-SanDisk joint venture and Samsung, Nanya and Inotera, as well as Micron and its joint venture IM Flash, as many as 14 memory fabs will come online in 2007, SMA estimated. Fully, two-thirds of all capacity coming online then will be for memory, according to the report.

Meanwhile, while wafer fabs throughout Asia Pacific will collectively spend more on equipment and construction, wafer fabs in the United States collectively will continue to outspend wafer fabs collectively based in any other country, the firm said.

"The United States as a region continues to be quite competitive in attracting new fabs," Burns said. "The United States is not only attracting U.S. companies such as AMD to build a fab in New York, but it is also attracting offshore investments by companies such as Korea-based Samsung and Germany-based Qimonda to build wafer fabs in Texas and Virginia, respectively."
 
After U.S. companies, Taiwanese and Japanese companies were reported to be the next largest investors in new fab construction worldwide since 1995. In this year's spending rankings, U.S.-based companies are expected to account for 30 percent of the worldwide total, which puts them 12 percentage points higher than the two countries tied for second place, Japan and South Korea, both at 19 percent of the worldwide total.