2010 Total Fab Spending Growth Could Reach 61%; Abrupt Reduction in Installed Capacity through 2010
By Christian Gregor Dieseldorff, SEMI Industry Research and Statistics, San Jose, California, July 02, 2009
Updated information from the World Fab Forecast shows the growth rate for total fab spending could be about 61% in 2010 (down from 90% previously report in mid-May) from a very low 2009 (Table 1). 2009 spending will reach such low levels that any adjustment or change in 2010 capital spending plans can drastically alter forecasted growth rates.
|In Million US $||2008||2009||2010|
|Total Fab Spending||30,864||15,227||24,591|
* Equipping Fabs: Any equipment related expenses for Front End Facilities including using new or used equipment.
In 2009, all regions will experience severe cuts in spending. However, the cuts are much less for the Americas and Europe/Mideast because of a boost from Intel and Globalfoundries.
Since the last publication in mid-May, over 60 companies have been evaluated worldwide by directly consulting, visiting (in Japan), and reassessing projects, so updates to 130 facilities have been made. This resulted in downward reductions in 2010 spending, in almost all regions, up to $3.5 billion as some projects have been pushed out further or investment plans continue to slow.
Table 2 lists the largest spenders with $1 billion and higher in total spending (both construction and equipping) for Front End fabs.
|Elpida/Powerchip JV||Toshiba/Sandisk Alliance||TSMC|
Spending for Equipping Memory Facilities
Spending for equipping Memory facilities (Flash and DRAM) represents the largest share in 2010 with about 47%, up from about 40% in 2009 (2008 share was about 60%) (see Figure 1). The share of foundries is expected to be about 23% and MPU at about 17%. Logic is expected to double its spending in 2010, increasing its share from about 8% in 2009 to 10% in 2010.
The foundry business has significantly improved off of the 1Q 2009 lows. For example, TSMC has reported increased revenue in 2Q09 and boosted 2009 capex. This trend changes the decline in 2009 foundry spending to about -10% where all other product segments experience deeper double-digit negative growth rates.
Will There Be Enough Capacity in the Future?
Total installed capacity worldwide could decline by about 2.5% in 2009 mainly due to fab closures. In 2010, the installed capacity is expected to see a growth of about 4.5% above 2009; however, if we compare 2010 with 2008, the result is only a 2% increase in capacity.
Figure 2 illustrates the change in plans for installed capacity from mid 2008 to current (mid 2009) projections.
Based on promising demand forecasts and drives to obtain market share, capacity investment plans were much more aggressive one year ago, with installed capacity projected to approach 19 million wafers per month (wpm) by the end of 2010. Of course, this has changed since then with many projects pushed out, put on hold or even cancelled. Today, the World Fab Forecast projects only about 16 million wpm capacity by end of 2010, a reduction of 3 million wpm from projections one year ago.
This is quite an abrupt reduction in capacity brought on by the global economic crisis. Some analysts have raised concerns about not having enough capacity in the future. If demand starts to accelerate, in line with an economic recovery, capacity will simply not be able to keep pace given the currently projected low-levels in capital spending. If there will be enough capacity or not remains to be seen.
The World Fab Forecast keeps close track of any planned projects resulting in any change of installed capacity.
SEMI World Fab Forecast report provides high-level summaries and graphs; in-depth analyses of capital expenditure, capacity, technology and products, down to the detail of each fab; and forecasts for the next 18 months by quarter. These tools are invaluable for understanding how 2009 and 2010 will look, and learning more about capex for construction projects, fab equipping, technology level, and products.
The difference between the SEMI Worldwide Semiconductor Equipment Market Subscription (WWSEMS) data and the World Fab Forecast and its related Fab Database reports is that the fab database reports track any equipment needed to ramp the fab, upgrade, expand or change its wafer size regardless if it is new equipment, used equipment, or transferred equipment, while WWSEMS tracks only new equipment.
Please visit www.semi.org/fabs for additional information on these reports.
July 6, 2009