SMA: New fab projects will lead way out of equipment downturn

May 5, 2003 – Santa Cruz, CA – New data from The Quarterly Spot Report on Semiconductor Fab Projects, from Strategic Marketing Associates (SMA), indicates some 36 new fab projects will likely get underway by 2Q04. Fab projects include expansions, upgrades, additional fab lines, and new construction. Another 24 fabs will begin production during that time.

New fab activity will bring about an upswing in overall capital spending of 16% to $31 billion as indicated by SMA’s ongoing survey of chip company capital spending plans. This is the first increase in capital spending since 2000. The report, which each quarter lists the previous quarter’s new fab announcements and projects, forecasts nearly $20 billion in new fab projects will begin construction this year. The total value of these projects, which will be realized over the next few years, is up 77% from 2002 when the value of new fab activity barely topped the $10 billion mark.

It’s expected that advanced processes will drive spending, according to SMA data. The continued migration to 130nm, the increased interest in 90nm plus the move to 300mm wafers will all drive capital spending and new fab projects.

“DRAM manufacturers who need to switch to and ramp 300mm production, will lead the way,” comments George Burns, president of SMA, a market research firm specializing in fab information. “They need 300mm to be competitive. And they’re in a hurry,” he says.

“But they’re not alone. Foundries too are adding capacity especially those not ranked in the top three. They don’t believe any technology or customer is reserved for TSMC, UMC, or Chartered Semiconductor.”

The report also compares the ramp of 200mm fabs versus 300mm fabs. There are almost 240 200mm fabs in operation today, almost all of which were built in the last 10 years. If 300mm replaces 200mm in a manner similar to which 200mm replaced 150mm, the industry could need an additional one hundred 300mm fabs within the next 10 years, according to SMA.


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