Intel, Samsung to spend twice as much as TSMC this year in semiconductor capex

by K C Krishnadas, TechOnline India - January 23, 2012

Intel, Samsung and TSMC have increase their capital expenditure on fabs by astounding high percentages since 2009.

Announcements by Intel and Samsung about their planned capital expenditures in 2012 show not only a wide but also growing separation between them and their competition. 

Intel's capex budget of $12.5 billion and Samsung with $12.2 billion budgeted for semiconductor capex, are each forecast to more than double the 2012 capex spending of TSMC, the next largest supplier, which has budgeted $6.0 billion in capex (Figure 1).  Together, Intel, Samsung, and TSMC are forecast to account for about half of the total semiconductor capex spending in 2012, according to The McClean Report from ICInsights.

The three companies have boosted capital spending by huge numbers since 2009. In 2010, TSMC doubled its capital spending compared to 2009, while Samsung tripled its spending!  In 2011, Intel doubled its capex compared to 2010.  Collectively, the planned capex spending of these three companies is forecast to be $30.7 billion in 2012, nearly 3x as much as they spent in 2009.

Samsung is significantly boosting spending for logic ICs, with about $6.5 billion of Samsung’s 2012 capex budget is dedicated to logic ICs.  Samsung currently has a lucrative business serving as Apple’s foundry partner for the A4 and A5 application processors used in iPad tablet computers, iPhones, and iPod touch devices.  

Samsung is demonstrating that it has the means to provide all the process and manufacturing muscle needed when Apple considers a foundry partner to build its next-generation processors.  Besides, it is aggressively ramping its in-house application processor business as demand increases for its smartphones, tablet PCs, and other mobile/media related devices. Meanwhile, the remaining $5.7 billion of Samsung’s capex budget will be applied to the production of memory ICs, with a good portion of the funding likely to be used to boost capacity for NAND flash memory.

 

Intel’s capex was $10.8 billion in 2011 and is forecast to be $12.5 billion in 2012—big numbers!  Intel is nearing completion of three new  wafer fabs located in Arizona, Oregon and in Ireland.  It is to start 14-nm production in Chandler (Arizona) when that fab opens in 2013.  The new Hillsboro 9Oregon) facility will focus on process development using 450mm wafers when it begins operations in 2013.  Meanwhile, several fabs will begin 22nm production of x86 processors in the second half of 2012

Intel is making a concerted effort to expand its processor presence in the market for smartphones and media devices.  Besides, its Ultrabook initiative has piqued consumer interest and is likely to create additional demand for the company’s processors in the second half of 2012.

For Samsung, Intel, and TSMC, the time has come to “put the hammer down” and position themselves as the strongest and most dominant IC suppliers in the industry.  In fact, the disparity is getting so large that these three are likely to become completely dominant in their areas of specialization, if they are not already there.  Smaller competitors will soon find it extremely challenging (impossible, in many cases) to remain competitive against these powerhouse companies when it comes to developing new products or competing on a cost basis.  Weaker suppliers will be forced out of the business and a higher percentage of capex spending will be in the hands of the fewer remaining players.

For more information go to http://www.icinsights.com/services/mcclean-report/

About Author

Comments

blog comments powered by Disqus