Capacity Tightens as Shortage Fears Rise
As older fabs close and relatively few new fabs are coming online, total fab capacity is staying flat. SICAS reported the number of actual wafer starts per week is improving quickly, while capacity declines. SEMI said installed fab capacity will decline 4% this year, as 31 older fabs close. Low capex spending has analysts predicting chip shortages.
David Lammers, News Editor -- Semiconductor International, 11/20/2009
SEMI updated its World Fab Forecast, showing that installed fab capacity next year will be little changed from late 2008 as widespread closures of older capacity continue. With relatively little new capacity coming online, some executives and analysts are voicing fears of widespread chip shortages next year if the world economy snaps back. Bill McClean, president of IC Insights Inc. (Scottsdale, Ariz.), said computer companies he works with are worried about DRAM shortages.
Speaking at a recent SEMI Austin economic outlook breakfast, McClean said PC companies are tracking SEMI's book-to-bill ratio, concluding that the level of equipment purchases will translate into DRAM shortages next year. Others are less concerned. McClean said most system companies are getting most of the parts they need now, and the Q1 2010 seasonal adjustment will lull some companies into thinking that shortages won't occur.
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Low capex levels have computer vendors worried about chip shortages. (Source: IC Insights) |
"Some might think they will be alright, but by the end of 2010, the shortages will be real," McClean said.
Not everyone agrees. Mike Howard, senior DRAM analyst at iSuppli, argued that DRAM companies expanded capacity so much during the 2005-2007 period that DRAMs will be sufficiently available until 2012.
"After engaging in a massive capital spending program during the middle of the decade, the worldwide DRAM industry now has sufficient manufacturing capacity to last through 2012, causing suppliers to cease expenditures on expanding production for the next few years," iSuppli reported.
Already, Nokia has said its smart phone sales have been crimped by cell phone parts shortages. Intel CEO Paul Otellini said that if system sales boom next year, the chip industry won't be able to meet demand. Already, Intel can't ship enough desktop chipsets. "The industry is not ready for this yet," Otellini was quoted as saying at an Intel Capital event. "One of the things I worry about is, will everybody's capacity be there in sufficient quantities to build it?"
SEMI fab update
Last year, 19 facilities closed, 31 are expected to close this year, and SEMI expects 18 to close in 2010, for a total of 68 closed facilities. The SEMI database includes 1086 facilities, with 983 currently in operation and ~60 facilities in the planning stage. Largely as a result of the closed fabs, installed capacity will decline by 4% in 2009.
In 2010, 15 facilities are expected to begin operation, 12 of which are volume fabs. However, most of the volume fabs are for discretes or LEDs, SEMI reported. Four foundry fabs and only one memory fab are expected to begin operations next year. The installed capacity for 2010 is expected to increase by 4.4%, reaching levels similar to late 2008, SEMI said.
Equipment spending will increase 65% to $23B in 2010, a slight improvement over SEMI's prediction in August of a 63% increase. About $2.7B will be spent on new fab construction next year, spread out over 23 construction projects, a 70% increase over this year's investments in fab construction.
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SICAS reports actual wafer starts per week (dark blue bar) are increasing, resulting in improved fab utilization (red line). |
The SEMI update comes on the heels of a report from the Semiconductor International Capacity Statistics (SICAS, Vessem, Netherlands) group, showing increasing wafer starts per week and rapidly improving utilization rates. However, total capacity is shrinking slightly.
With fewer trailing-edge fabs in operation, SICAS estimates that in Q3 2009, the weekly wafer start capacity for ICs was 1.93 million. Utilization rates for IC production sharply improved, increasing to 87% in Q3 from 78.1% in Q2 and only 56.8% in the first quarter of this year. The Q3 2009 rate was nearly identical to the year-ago quarter, when utilization was 87.1%.
Discretes showed a similar pattern, though the capacity for wafer starts per week declined at a faster rate. In Q3 2009, there was capacity for 319,000 wafer starts per week, SICAS reported, down from 324,100 in Q2 and 334,200 in the first quarter.
With discretes and ICs combined, the total capacity for semiconductor wafer starts per week was 2.11 million in Q3 2009, down slightly from 2.13 million in Q2 and 2.18 million in Q1. In Q4 2008, total capacity for semiconductor wafer starts was 2.39 million, a 1.7% decline from Q3. Before then, capacity had increased for eight quarters running.
Total semiconductor utilization was 86.5% in Q3, up from 77% the previous quarter and returning to utilization rates seen in 2006, 2007 and the first three quarters of 2008.
Reflecting improved demand, actual wafer starts per week improved to 1.82 million in Q3 2009, up from 1.64 million in the second quarter.
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