Low levels of fab spending this year could lead to significant shortages in chip capacity, according SEMI, the trade body for the semiconductor production equipment industry.
'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', says SEMI.
Fab spending should rise over 60 per cent next year, according to SEMI,
However it's coming from the very low base of 2009. $4.6bn was spent on fab construction last year, but only $1.6bn will be spent this year, with £2.8bn forecast to be spent next year.
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For equipment spend the figures are: 2008 - $26bn; 2009 - $14bn; 2010 $22bn.
Total fab spending for the three years is: $31bn; $15bn; $25bn. So there's still a long way to go to get back to the level of 2008.
'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', says SEMI.
Last year the top spenders were Samsung, Toshiba/Sandisk, Intel, Elpida/Powerchip, Hynix, Micron/Intel flash JV, TSMC and Micron; this year the top spenders will be Intel, Samsung, TSMC and Toshiba/Sandisk; next year the top spenders will be Intel, Sasmung, TSMC and Globalfoundries.
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%).
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? asks SEMI. It reckons 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.
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 19m wafers per month by the end of 2010. Of course, this has changed since then with many projects pushed out, put on hold or even cancelled. Today, SEMI forecasts projects only about 16m wpm capacity by end of 2010, a reduction of 3m wpm from projections one year ago. 'This,' concludes SEMI, 'is quite an abrupt reduction in capacity.'