MARKET NEWS - 'Fantastic Six' expected to spur capex growth in 2010

TechOnline India - September 03, 2009

Total worldwide fab spending is expected to grow 64 percent in 2010 to reach $24 billion, thanks largely to about $14 billion in planned spending from six chip companies, according to the trade group SEMI.

SAN FRANCISCO—Total worldwide fab spending is expected to grow 64 percent in 2010 to reach $24 billion, thanks largely to about $14 billion in planned spending from six chip companies, according to the trade group SEMI.

While a 64 percent increase in fab spending (including the construction and equipping of fabs) sounds impressive, it is important to keep in mind that the increase comes on the heels of historic lows in 2009, cautioned SEMI analyst Christian Gregor, in a report circulated Thursday (Sept. 3).

Gregor expects six companies—TSMC, GlobalFoundries, Toshiba, Samsung, Intel and Inotera Memories—to account for significantly more than half of worldwide capital spending in 2010. Combined, spending by these six companies is expected to be roughly equal to what total worldwide capital spending will be in 2009 ($14 billion-$15 billion), he said.

Gregor said Samsung's 2010 capital spending is expected to be between $4 billion and $5 billion, followed by Intel at $3 billion to $4 billion. TSMC and Toshiba are each expected to spend about $2 billion, he said. He estimated that GlobalFoundries and Inotera would each spend about $1 billion.

In 2010, the region spending the most on construction projects will be the Americas, thanks largely to GlobalFoundries' fab project in New York. For equipping facilities, the Americas also lead, followed by Taiwan and Korea, SEMI said.


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The six companies projected to lead in capital spending in 2010 account for about 30 percent of the worldwide share of combined installed fab capacity., according to SEMI. Most of the 2009 and 2010 investments will go to upgrade fabs rather than invest in new fab capacity, SEMI said.

The trade group noted that GlobalFoundries capacity is small compared to the other five, but the company is just beginning to ramp up new volume capacity and prepare a new fab.

The economic downturn has taken its toll on worldwide capacity, SEMI said. Not only did spending lag in 2009, but 31 fab closures are expected by the end of the year, according to SEMI World Fab Forecast data. Another 16 fabs are expected to close in 2010, SEMI said.

The average fab utilization rate reported for the industry dropped to 56 percent in the first quarter, SEMI said. Although a few companies—such as TSMC—are now running some fabs at 100 percent utilization, the overall utilization rate is still expected to lag at 70 percent to 80 percent by the end of 2009, SEMI said.


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