Foundries and OSATs Driving Taiwan Investment

Foundries and OSATs Driving Taiwan Investment

By Clark Tseng, senior manager, Market Analysis, SEMI Research and Statistics

For the semiconductor industry, 2012 started out with a mixed bag of results in the first quarter.  Foundry and memory makers were mired in a market trough that continued from the weak second half of 2011, but they did see light at the end of the tunnel. Demand started to turn around in the late first quarter of 2012 and picked up fairly quickly in the second quarter. Still, concerns over macroeconomics softness and European sovereign-debt loom ahead. We expect market growth will vary quite a bit among industry different segments this year. Among all the segments, the foundry segment is expected to enjoy healthier growth boosted by strong demand from the mobile sectors and for smart devices. The memory segment is seeing mixed results as the NAND flash market expects modest growth while DRAM is still losing money but stabilizing after Elpida’s bankruptcy.  

For the Taiwan market, the capital equipment market is expected to reach about US$ 9 billion in 2012, an increase from the $8.5 billion spent in 2011. This is an improvement from outlooks issued earlier in the first quarter as foundries and OSAT players in Taiwan coincidentally raised their capital expenditure this year in view of a surge in demand. Investments from foundries are focusing on building advanced nodes capacities in order to meet strong demand for 28nm process. TSMC alone raised their capex from $6 billion to over $8 billion in 2012 just to catch up with the 28nm demands.

On the OSAT side, overall Taiwan backend equipment market is expected to be about $1.4 billion in 2012. Major OSATs such as ASE, SPIL and Powertech are speeding up their advanced packaging investment in Taiwan to fulfill increased demand from mobile devices.

We expect the investment momentum in Taiwan could continue into 2013 especially from foundries. Both TSMC and UMC have embarked on new multi-billion 300mm fab construction in the second quarter of this year in Tainan aiming to provide sufficient 28nm and below capacity in the years to come.

For semiconductor materials, worldwide semiconductor material market is forecasted grow to $49 billion in 2012, up from $48 billion in 2011. Taiwan has surpassed Japan as the largest material consumption market in the world in 2011 reaching $9.7 billion and is forecast to surpass $10 billion in 2012. Taiwan will also take lead in packaging material market with over $6 billion revenue.

In the past decade, foundry and DRAM were the two pillars of Taiwan semiconductor manufacturing industry that drew billions of investment. With the consolidation of DRAM industry, the focus now turns even more sharply to the foundry companies. In the longer run, memory sector will still play a key role in Taiwan semiconductor industry. The DRAM-centric production will gradually diversify into NAND/NOR flash and other types of memory production. With complete supply chain in place, Taiwan will still serve as an important manufacturing base for memory chips. 

Some New Investment Highlights in Taiwan

Company

Projects/Plans

TSMC

Fab 12 Phase 6 - Under construction, production to start in 2013

Fab 14 Phase 5 - Broke ground in April 2012

Fab 15 Phase 3 - Under construction, production to start in 2013

UMC

Fab 12A P5/P6 - Broke ground in May 2012

Fab 12A P7/P8 - planned

ASE

New facilities under construction in Kaoshiung and ChungLi

SPIL

Capacity expansion in Changhua facility

PTI

Accelerate logic IC assembly & testing investment

ChipMOS

Acquired facility in Tainan for future expansion

KYEC

Capacity expansion primary for Communication ICs and CMOS image sensors

Epistar

HB-LED fab in Chunan - Groundbreaking expected in 2H 2012

 

For more information about the Taiwan market, participate in SEMICON Taiwan (www.semicontaiwan.org) from September 5-7 in Taipei.

This event will feature numerous theme pavilions focusing on Advanced Packaging/Test, LED, MEMS, Green Management, Secondary Market, Other Countries and more. Forums and programs include System in Package (SiP) Global Summit, IC Design Forum, CEO Forum, and more.

July 2, 2012