By Christian Gregor Dieseldorff, SEMI Industry Research and Statistics
Changes in the global economy affect the semiconductor industry, as the industry depends more on the consumer market. Economic developments in recent months decreased consumer confidence and spending, and the semiconductor industry has reacted to this slowdown.
The SEMI World Fab Forecast uses a bottom-up methodology, tracking over 250 on-going construction and equipping projects by fab and company. At the end of May 2011, the report predicted 31% growth for fab equipment spending for the year. The prediction is now revised downwards to 23%, as some companies have adjusted plans due to the broader economic conditions.
Fab Equipment Spending (new and used)
The Americas Lead Fab Equipment Spending for the First Time since 2002
The $41 billion in fab equipment spending in 2011 will be the highest on record. Although 2012 spending will decline, the total for 2012 may still be the second highest on record.
In 2011, SEMI counts 223 facilities spending on equipment. Of these, 77 projects are for LED dedicated facilities. Next year, 190 facilities will start or continue equipping, with 72 LED projects.
The highest spending in 2011 occurs in the Americas with about $10 billion, followed by Taiwan with about $9 billion. The Americas region last led spending in 2002. Although Intel spends the most, another key reason for America's lead is Samsung's spending of about $2.5 to $3 billion in their Austin fab, dubbed the S2-line.
In 2012, Korea is predicted to step ahead of the Americas, with over $10 billion in fab equipment spending, followed by Taiwan at $9.2 billion.
Some Cut, while Some Still plan to Increase Spending
Over the last few months, some companies announced cuts in capex for 2011, but for a number of companies, capex plans remain unchanged. Some announced even slight increases though caution is becoming more apparent in the market.
TSMC reduced its capex plan slightly, from $7.8 billion to $7.4 billion. SMIC cut capex from $1 billion to $800 million. Micron just closed their fiscal year with spending of $2.9 billion. Their new fiscal year 2012, beginning September 1st, includes capex plans of only $2 billion.
Intel increased capex plans by about $500 million to pave the way for the 7nm node, enhance its 14nm fabs under construction, and fuel its efforts in hot consumer areas such as servers, notebooks, tablets, and smart phones.
Samsung total capex remains unchanged. However, resources may be reallocated to increase semiconductor and reduce LCD business.
Infineon increased its capex twice this year from 550 million Euros (about US$ 770 million) to 850 million Euro (about $1.19 billion) in May 2011 and then again in July to be slightly above the 850 million Euro.
Winbond increased capex slightly from about $190 million to about $210 million. UMC capex remains unchanged. Hynix also plans to spend the same amount, but may reduce the speed of ramping capacity.
Worldwide Capacity: Steady as She Goes!
As the semiconductor industry adjusts to the market with some spending cuts, the SEMI World Fab Forecast report also predicts that the capacity ramp will slow. 2011 growth of 9.3% (predicted in May 2011) will slow to 6.8%.
In 2011, capacity for about 970-thousand wafers per month (in 200mm EQs) is expected to be added. More than half of this new capacity is for Memory (57%), 15% for Logic and 11% for Foundries. In 2012, SEMI predicts capacity increase for more than 1M wafers per month, a growth rate of about 7%. Currently, 2013 is also expected to show 7% growth in capacity.
Before the economic downturn in 2008, growth rate for installed capacity (2004-2007) was consistently in double digits. Subsequent years show less than 10% growth every year (2010-2013). This may be explained by the fear of building up too much capacity, resulting a much more controlled and conservative approach of the industry. However, there are also concerns that the industry may not be able to meet rapid increasing demand.
Construction Increases in 2011, but More Slowly; even a New 200mm Fab
In the previous SEMI Worldwide Fab Forecasts articles, the "fab-tight" era was described. Trends show construction projects decreasing at rates which call for concern. Fabs are larger and fewer, and technology nodes are shrinking. Looking ahead, the industry may need to react soon to rapidly increasing demand, for example in the NAND Flash market. It takes about 1.5 years to bring a fab from ground breaking to volume production, so in order to see capacity ramp increase in 2012 or 2013, construction projects need to start pretty much now.
The SEMI data closely track construction activity, especially for new facilities. Since the May 2011 edition of the Worldwide Fab Forecast, 2011 fab construction project spending (including Discretes and LEDs) have increased from about $4.8 billion to $5.6 billion. In May 2011, 61 construction projects were counted; now, 72 are under way. Most of the increase is due to more LED fabs in China. Only 40 construction projects are predicted for 2012, less than half of the activity seen before the economic downturn.
Construction spending for 2011 is expected to increase 7%, or $5.6 billion. In 2012, spending will drop 25% to only $4.2 billion. In 2011, 23 new volume fabs began or will begin construction; only 10 such projects are currently foreseen for 2012.
In a blast from the past, new 200mm fabs are still being built. Infineon began construction of their new 200mm fab in Kulim, Malaysia.
The Future Still Looks Good
2011 will be a record year for total spending. In response to the last recession, the industry has become leaner and proven that it can react quickly to global economic fluctuations.
As we may approach some more volatile times ahead, we expect the industry to react as quickly as we saw in 2009. For as long as there is a positive growth rate for equipment spending, 2011 remains to be a record year. At this point of time, we expect a negative growth rate for next year but the absolute numbers are still very high, keeping 2012 in top three in terms of equipment spending.
Since the last fab database publication in May 2011, SEMI's worldwide dedicated analysis team has made over 330 updates on more than 250 fab facilities in the database. Fifteen new facilities have been added to the database, 10 of these LED fabs. The latest edition of the World Fab Forecast (published August 30, 2011), lists over 1,100 facilities, with more than 65 facilities starting volume production beginning next year and into the future.
The SEMI World Fab Forecast uses a bottom-up approach methodology, providing high-level summaries and graphs; and in-depth analyses of capital expenditures, capacities, technology and products by fab. Additionally, the database provides forecasts for the next 18 months by quarter. These tools are invaluable for understanding how the semiconductor manufacturing will look in 2011, 2012 and 2013, and learning more about capex for construction projects, fab equipping, technology levels, and products.