There will be a sharp increase in spending on fab equipment next year but not much spending on fab construction, says SEMI, the trade body for the semiconductor manufacturing equipment industry.
After a 46% decline in capex spending predicted for this year, succeeding a 31% drop in 2008, SEMI reckons capex will rise 65% in 2010.
'The coming year appears to be a year of recovery, but plans for new fabs remain on hold', says SEMI, 'the SEMI World Fab Forecast report shows that most companies will not invest in new facilities or significantly in new capacity in 2010. Companies show more interest in investing in equipment used for technology upgrades. 2010 Fab Forecast: 65% Growth on Fab Spending.'
According to SEMI, in 2008, only $4.35bn was spent on new fab construction and that slumped to $1.57bn this year. Next year it is expected to rise to $2.67bn.
The spending on equipment was: $26.2bn in 2008; expected to be $13.89bn this year and forecast to reach $22.98bn in 2010.
The World Fab Forecast looks into how much money is needed for projects such as ramping up a facility (R&Ds, Pilot and Volume Fabs), upgrading, or expanding a facility. These figures include all equipment (new, used, or in-house), as well as money from any outside sources such as governments or outside investors.
'For 2009, spending improved in the second half of the year; and this growth is expected to continue into 2010, says SEMI, this trend is based on announced capital expenditures by a number of semiconductor manufacturers over recent months.
The largest six spenders in 2010 are Samsung, Intel, TSMC, Flash Alliance, GlobalFoundries, and Inotera.'
TSMC increased capex three times in 2009. Samsung will invest 5.5 trillion won in memory chips in 2010 (up from 4 trillion won this year) in an effort to raise its DRAM share to 45% according to Korea Times. GlobalFoundries is expected to spend $1.2 to $1.4bn in 2010.
Spending on fab construction projects in 2009 is expected to be below $1.6bn which is the lowest level in more than 15 years. Construction spending in 2010 is expected to increase by about 70% to $2.7bn.
49 facilities have closed, or will close, by the end of 2010. This translates into a decline of -4% to -5% in total installed capacity for 2009. This decline is unprecedented over the last 20 years.
In 2010, installed capacity is forecasted to grow by 4% to 5% compared to 2009. This translates into zero capacity growth from 2008 to 2010.
'With various market research organizations expecting semiconductor revenue growth of 10% to 22% in 2010, it seems unlikely that demand will remain flat next year,' says SEMI, 'so as most companies focus their investment in technology upgrades, the future growth rate of installed capacity appears not in sync with demand.'
It typically takes 1 to 1½ years from groundbreaking until a fab can begin to ramp production capacity, points out SEMI. with a number of new construction plans shelved over the past year, additional capacity over the next year or so will be limited.
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