Give away medical masks when you place an order. learn more

Semiconductor Equipment Spending Will Rise 23 Percent in 2011


Spending by semiconductor companies on fab equipment will increase 23 percent to a record $41.1 billion, which should result in more chip capacity, according to trade association SEMI.

While the $41.1 billion in equipment spending by suppliers is a record for a year, SEMI scaled back its forecast for fab equipment spending growth to 23 percent for 2011. In May, it had forecast 31 percent growth for equipment spending by chipmakers. However, it downgraded its forecast because of the weak economy, which is resulting in semiconductor suppliers reducing their capital expenditure plans for the year.

SEMI said while equipment shipments were strong in the first quarter, they declined about 1 percent in the second to $11.9 billion. New orders for semiconductor equipment decreased 3 percent to $10.76 billion in the second quarter compared to the first.

“Changes in the global economy affect the semiconductor industry,” said Christian Gregor Dieseldorff, senior analyst of fab information in the SEMI Industry Research and Statistics group. “Economic developments in recent months decreased consumer confidence and spending, and the semiconductor industry has reacted to this slowdown.”

Brian Matas, vice president of research at IC Insights, based in Scottsdale, Ariz., agrees.

“The poor economy is definitely having an impact on planned capital expenditures,” said Matas. He noted that chipmakers were investing in new equipment earlier in the year, but then “uncertainty over the US economy and the debt ceiling crisis made companies sit back and wait to see what would happen.” He added while the debt ceiling crisis has passed, many companies still are not confident that the economy will grow and have scaled back capital spending.


While semiconductor equipment spending increased to a record $41 billion in 2011, it will dip about 3 percent in 2012.
Chipmakers may be also impacted by consumers who are also reducing their spending.

“Slower PC sales, and consequently less DRAM demand from the computer segment, have cut into spending plans among DRAM makers,” said Matas. He added that foundries “had big plans to expand at the beginning of this year,” but those plans were scaled back as foundries determined they had plenty of capacity to meet current demand.

The overall economic slowdown will impact semiconductor capital limit spending in 2012, as well as equipment spending, resulting in a decline of 3 percent to $40 billion, reported SEMI.

The association conducted a study and counted the spending for semiconductor equipment at 223 facilities. Of these projects, 77 were for light emitting diode facilities.

The highest spending for equipment in 2011 will occur in the Americas, as about $10 billion of equipment will be purchased through the year. Intel, based in Santa Clara, Calif., will have about $10.1 billion in capital expenditures this year and about 75 percent of that will be for equipment, according to IC Insights. In addition, Samsung is spending about $2.5 to $3 billion at its Austin, Texas fab.

Chipmakers is Taiwan will spend the second most on fab equipment purchasing about $9 billion of equipment in 2011, reported SEMI.

Much of 2011 capital spending will be for 300 mm wafer production as suppliers transition away from 200 mm wafers. The amount of equipment purchased for 300 mm chip production will increase from $26.3 billion in 2010 to $34.6 billion in 2011, according to SEMI.

The 23 percent increase in fab equipment spending in 2011 by chipmakers will result in an increase of 6.8 percent in semiconductor capacity. In May, SEMI had had forecast a 9.3 percent increase in capacity, but because suppliers are reducing equipment spending, the increase in capacity will be reduced. That may result in longer leadtimes in the future for some high-demand products such as NAND flash memory.

SEMI noted that it takes about 1.5 years from the time construction of a fab begins to when it reaches volume production.

SEMI is the global industry association serving the manufacturing supply chains for the microelectronic, display, and photovoltaic industries.

Supplier