March 5, 2012 — After only 2 months, semiconductor foundries are already considering raising their 2012 capital expenditure (capex) budgets, says Terence Whalen, Semiconductor Equipment analyst for North America at Citi.
The wafer foundry ramp up shows no signs of ending, with TSMC and Samsung likely to raise capex in 2012 to accommodate 28nm demand. Coupled with improving gross domestic product (GDP) and Purchasing Managers Index (PMI) that could increase overall IC demand in 2H (see the figure), wafer fab equipment (WFE) orders could grow 5-10% in 2012.
|Figure. Wafer fab equipment spending in relation to the global economy. SOURCE: Citi and company reports.|
Whalen reports "widespread concern" over conservative 28nm capacity plans at TSMC. TSMC could meet only 60% of Qualcomm’s demand for 28nm capacity; Nvidia could not get its desired 28nm allocation, hurting 28nm shipments for the company; smaller customers have seen their 28nm plans unmet by the foundry. TSMC seems to be reevaluating their 28nm plan, especially with customers exploring other foundries for partnerships. TSMC could add as many as 35,000-40,000 wafer starts per month (WSPM) by the end of 2012, at least 10,000 more than originally planned. This would add $1.5 billion to $2 billion to TSMC’s $6 billion capex budget.
Samsung could benefit from the conservative 28nm capacity available at its competitors. Qualcomm recently committed significant 28nm orders to Samsung (10-15K WSPM); AMD is in deep discussion for 28nm CPU production at Samsung. Samsung is likely to add more capex to meet new demand for its foundry services, especially in H2 for 28nm expansion. Also read: Samsung plans record investments in 2012
Read the Citi report at http://ir.citi.com/TSF43R7lOMsfHHl5CDRgUjFs9kcXoS9IFs0ZC7UVL6o%3D