REPORT: Fab construction in three quarters of 2003 higher than all of 2002

OCT. 28–SANTA CRUZ, Calif.–The most recent edition of The Quarterly Spot Report on Semiconductor Fab Projects, released by Strategic Marketing Associates (SMA), shows that the improving economy and growth in chip sales are boosting wafer fab construction activity.

The value of new fab projects started this year so far is $13 billion, more than in all of 2002. The report lists 37 upgrades or new fab projects that could start or restart construction in the next four quarters. In addition, 17 new fabs are expected to come online in the next four quarters.

The report expects that eight new fabs will start or restart construction in 2003 alone. Only one of these will be a 200 mm fab, valued at $1.3 billion. The seven others will all be 300 mm, whose total value when fully ramped will be $12.7 billion, an increase of 53 percent over last year.

Most new construction will be 300 mm as all the DRAM fabs continue migrating to 300 mm. Many of today’s 300 mm foundry fabs are less than half equipped, and they will also add capacity to meet growing demand.

“We expect even stronger new fab activity in 2004 as DRAM companies maintain their 300 mm momentum and foundries begin to fill in empty spaces left from bringing new fabs on line at the beginning of the last downturn,” said George Burns, president of Strategic Marketing Associates, a market research firm specializing in fab information. “In fact, there could be so much new foundry production added in the next two years that overcapacity could result.”

Burns sees growth in new fab activity and capital spending at restrained levels this year, but picking up strongly in 2004. The report’s ongoing capital spending survey indicates chip makers will increase spending by 11 percent this year to $31 billion, up from $28 billion last year. But the forecast is for an increase of 23 percent in 2004 to almost $40 billion.

Data also confirms the continuing growth of Asia Pacific. For the first time, Asia Pacific companies outspent US companies as well as all other regions of the world. “From now on, Asia Pacific is going to be the champ,” Burns added. “Not only in terms of spending, but also where the fabs are being built.”

In 2003, spending by U.S. companies will be down for the third year in a row, 55 percent below its peak of $21 billion in 2000. Leaving out Intel, spending by US companies has fallen from 30 percent of the worldwide total to just 18 percent. Intel’s share of worldwide capital spending is 12 percent.

“Outsourcing has a lot to do with this,” Burns said. “It’s also one of the main reasons why Asia Pacific is the new manufacturing center of the industry.”


Easily post a comment below using your Linkedin, Twitter, Google or Facebook account. Comments won't automatically be posted to your social media accounts unless you select to share.