Stampede of the Giants: Equipment Spending Growth Flat in 2012
Record Fab Equipment Spending Expected for 2013
By Christian Gregor Dieseldorff, SEMI Industry Research and Statistics department
San Jose, California, March 1, 2012
In January, SEMI analyzed fab spending and capacity growth for 2012 and 2013 (see article “Fearless into a ‘Doomsday’ Year”). At that time, fab equipment spending was expected to improve from -11 percent year-over-year (YoY) to -4 percent depending on announcements from key spenders. This analysis assumed more spending by Samsung and less by TSMC; at the time, it was uncertain whether Hynix would increase or decrease spending. In fact, Hynix increased spending in 2012 by 23 percent to about US$ 3.75 billion, while UMC increased spending from $1.6 billion to $2.0 billion. More surprisingly, Intel increased spending much more than expected, to a historic high of about $12.5 billion.
SEMI’s data forecast that in 2012, eight companies will keep their spending level above $2 billion (versus seven big spenders in 2011). These eight include the giants Samsung and Intel. The stampede of these giants continues, causing equipment spending to improve from a negative outlook in December to 0 percent (flat) — for 2012 (see Figure 1). If macroeconomic factors improve and other companies adjust their capex plans, then equipment spending could even cross into positive territory.
Figure 1: Source: SEMI World Fab Forecast February 28, 2012 edition (corrected table on March 13, 2012)
The spending trend is expected to continue into 2013, as companies compete for market share in the Foundry, System LSI, MPU and NAND sectors. Companies continue to invest in upgrades and leading edge technologies, and ramping up fab capacity. SEMI’s latest World Fab Forecast (February 28, 2012) lists 192 facilities with equipment spending in 2012. Eight of those will spend more than $1 billion. In contrast, in 2013, only 162 facilities will equip, but almost twice as many will spend over $1 billion.
The recent released fab database reports by SEMI give a detailed picture fab by fab, by region, and by product type.
Construction Projects: Decline after Peak
2010 was a good year for fab construction; 2011 was even better with a 24 percent increase YoY to $6.4 billion. For 2012, spending on construction is expected to decline by about 28 percent to $4.5 billion; in 2013, it will fall even further by 38 percent reaching $2.8 billion. The number of facilities planning construction spending will also drop: from 79 facilities in 2011 to 39 facilities in 2012, and only 21 in 2013.
Most construction projects in recent years were for new LED fabs, but even this area is projected to decline rapidly, mainly due to changes in government incentives in China. In 2011, about 60 percent of construction projects were for LED fabs; in 2012, LED projects make up just under half of the announced projects; while in 2013, only three construction projects are expected to be for LED fabs.
SEMI’s World Fab Forecast lists six potential new fab construction projects in 2012 (three for LED fabs and three for memory fabs). In 2013, the report lists eight new fab construction projects. Most construction money spent in 2012 will be for MPU, followed by Memory and Foundry. In 2013, Memory increases spending on construction projects, while foundries decrease.
Overall Growth Rate for Installed Capacity is Slowing, but Not for All Segments
Before the last economic downturn, installed capacity grew between 10-23 percent every year from 2003 to 2007. Coming out of the downturn from 2010 on, yearly capacity growth has been a more sedate 5 to 10 percent and is expected to stay modest for the foreseeable future.
In February 2012, SanDisk stated that demand for Flash memory will increase about 7.5X by 2015 to about 150 billion GB (gigabyte) per unit. SEMI’s fab data shows rapid increases in fab equipment spending for NAND related fabs began in 2010 in anticipation of this demand growth and resulted in strong capacity growth in the Flash sector. See Figure 2.
Figure 2: Source SEMI World Fab Forecast February 2012
While installed capacity for DRAM is expected to level out, Flash capacity is growing rapidly between 2010 and 2013. There are not many new Flash fabs, but some of the existing ones are huge megafabs with capacities of over 200K 300mm wafers per month: Flash Alliance continues ramping their new Fab 5 Phase 1, Samsung ramps Line 16, IM Flash keeps ramping in Singapore, and Hynix is expected to begin ramping M12 in the second half of 2012.
The dedicated foundry sector will also undergo growth in installed capacity. Main contributors are TSMC, Globalfoundries, and UMC. TSMC is ramping two fabs at the same time in 2012: Fab 12 Phase 5 and Fab 15, Phase 1. In addition, TSMC began construction on two new fabs last year: Fab 15 Phase 2 mid of 2011 and on 15 Phase 3 at the end of 2011. Meanwhile, Globalfoundries is adding capacity at its Dresden plant with the new addition Fab 1 Module 3; and also continues its Fab 8 investments in Malta, New York. UMC’s spending is on-going for its Fab 12A Phase3/Phase 4 300mm fab. Samsung has dramatically boosted investment in System LSI fab, increasing installed capacity for System LSI to over 980,000 wafers per month, or a 90% increase between 2009- 2013. (SEMI’s recent released Fab database reports enable data analysis by technology node, product type, region, company and fab by fab.)
The stampede of the giants Intel and Samsung makes the start of this year look much better for fab equipment spending. We expect other companies to join in the stampede for next year and data for 2013 promise another record year. Many companies continue to invest in technology upgrades of existing fabs. Lower construction spending compared to recent years, especially on new fabs, raises some concern about available capacity beyond 2013. Overall, the industry has tried to control installed capacity at more reasonable levels since coming out of the 2009 downturn. Now due to increasing demand, some segments, such as for Flash, Foundry, and System LSI, is experiencing a boost in installed capacity.
SEMI Industry Research and Statistics Department: a Worldwide Dedicated Team
Since the last fab database publication at the end of November 2011, SEMI’s worldwide dedicated analysis team has made over 220 updates on more than 190 facilities (including 58 LED fabs) in the database. The latest edition of the World Fab Forecast (published February 28, 2012), lists 1,153 facilities (including 300 Opto/LED facilities), with 69 future facilities starting production this year and in the future.
The SEMI World Fab Forecast uses a bottom-up approach methodology, providing high-level summaries and graphs; and in-depth analyses of capital expenditures, capacities, technology and products by fab. Additionally, the database provides forecasts for the next 18 months by quarter. These tools are invaluable for understanding how the semiconductor manufacturing will look in 2011, 2012 and 2013, and learning more about capex for construction projects, fab equipping, technology levels, and products.
Also check out the New Opto/LED Fab Forecast.
SEMI’s Worldwide Semiconductor Equipment Market Subscription (WWSEMS) data tracks only new equipment for fabs and test and assembly and packaging houses. The SEMI World Fab Forecast and its related Fab Database reports track any equipment needed to ramp fabs, upgrade technology nodes, and expand or change wafer size, including new equipment, used equipment, or in-house equipment.
San Jose, California
March 6, 2012