2013 to be golden year for fab capex, says SEMI
2013 may be another golden year for fab equipment spending, says SEMI, with growth of 17% to almost $43bn.
The last two golden years were 2007 and 2011, says SEMI: “Although spending in 2012 will decline, it may still turn out to be the third largest spending year on record for overall fab equipment spending.”
SEMI reckons 200 facilities will be equipping next year (including Discrete and LED fabs).
Key drivers for fab equipment spending in 2012 are the foundries, led by TSMC, Globalfoundries, and UMC with over $10bn combined spending. Their dominance continues in 2013 with about another $10bn in spending.
Examining fab equipment spending by product type, the DRAM sector is still struggling with declining ASPs. The industry lost German maker Qimonda in 2009, Powerchip exited DRAM in 2011, and ProMOS is struggling.
In order to avoid further ASP declines, DRAM makers ceased investments in new capacity and those who could afford it focused investment in new technologies and upgrading existing fabs. After the bankruptcy of Elpida, at the beginning of 2012, global capital expenditure for DRAM declined to very low levels. This is not expected to change in 2013.
Flash investments also slowed in 2012. For example, at the beginning of 2012, Sandisk announced a pause in Fab 5 capacity expansion. At the end of July, Toshiba announced it will cut its NAND production by 30%.
However, SEMI reckons that Flash investments will pick up again in 2013, with big spenders Samsung (mainly Line 16), SK Hynix, Flash Alliance, and Micron.
Samsung turned its attention towards System LSI by converting existing Memory fabs into System LSI and building new ones. Samsung is predicted to spend $5bn in 2012 and over $6bn in 2013, on System SI.
Although more fab projects have begun than estimated last year, the overall number of fab construction projects has declined year-over-year. Looking at how this affects investments, in 2012 investments for construction projects are expected to decline by 4.4% (from about $6.4bn to $6.1bn). In 2013, another 10% drop will bring fab construction spending to about $5.5bn.
Foundries perform much better than other industry segments in terms of installed capacity growth. Foundries are even more necessary given industry consolidation and as more IDMs change to a fab-lite or fabless business model. Examining installed capacity by product type, Flash will overtake DRAM in 2012.
Cutbacks in Flash production in 2012 have improved ASPs so companies will likely increase Flash capacity in 2013 to meet anticipated demand growth. DRAM capacity investments are at “maintenance level,” so no increase of installed capacity is expected in 2013. Samsung’s heavy investments in System LSI will singlehandedly grow SLSI capacity (its $4bn conversion of Austin, TX fab from Flash to 28nm SoC logic devices).
While 2012 may not bring positive growth, it may still end among the top performing years. As the industry continues to consolidate, with more companies moving towards a fab-lite or fab-less model, traditional foundries continue to expand and some big IDMs ramp their foundry services.
Investment “engines” may be idling in the near-term, and those investments could gear up for a smooth acceleration into 2013, driven by high demand for mobile devices.