Industry capital spending to inch up 1% in 2007

By Colleen Taylor, Contributing Editor -- 6/20/2007

According to analysts at market research firm IC Insights, total semiconductor industry capital spending is forecasted to climb just 1 percent in 2007—a stark change from the 18 percent growth in spending the industry saw in 2006.

Leading the industry's capex for the year is projected to be Samsung, with $6.7 billion in spending. Samsung is expected to be followed by Intel, which IC Insights said would spend $5.5 billion over the year. The firm said that Samsung and Intel, despite having both decreased their capex from 2006, are forecast to represent a combined 22 percent of total semiconductor capital expenditures in 2007.

The top 25 companies (see chart below) expected to lead capital spending this year, according to IC Insights, are expected to register a 2 percent increase in total 2007/2006 capital spending and are expected to account for 87 percent of total worldwide semiconductor capital spending in 2007.

The firm noted that 16 semiconductor companies have billion-dollar-plus capital expenditure budgets for 2007. Five of these are based in Taiwan, four in the United States, three in Japan, and two each are from Europe and South Korea.

The combined spending from the Taiwan-based producers is expected to increase 16 percent in 2007, a solid follow-up to the 37 percent increase IC Insights reported they saw in 2006. In fact, the Taiwanese and "other" companies, including China- and Singapore-based companies, are expected to be the most aggressive spenders in 2007, with an average 12 percent increase in capex. Meanwhile, North American companies are expected to grow 1 percent, South Korean companies' spending is estimated to be flat, European are projected to be down 5 percent, and Japanese companies are expected to spend well below the industry average at a 12 percent decline.

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