August 31, 2004 – Wafer fab capacity utilization for integrated circuits climbed to 95.4% in the second quarter of 2004, according to new industry data released in late August. The 2Q fab utilization rate was the highest on record since the peak of the last IC boom period in 2000. Four years ago, fab utilization rates topped off at 96.4% in 3Q00, based on data compiled by the Semiconductor International Capacity Statistics (SICAS) organization in Vessem, the Netherlands.
The new fab capacity and utilization report shows no hints of demand slowing, despite recent concerns about increases in IC inventories for some key applications, such as PCs. According to the new SICAS report, IC fab capacity sequentially grew 2.4% in 2Q, reaching nearly 1.406 million 200mm-equivalent wafer starts/week (WSpW), compared to about 1.373 million in 1Q04. On a year-over-year basis, IC fab capacity grew 7.5% in the second quarter from 1.308 million in 2Q03, the report said.
Worldwide IC fab utilization rates have climbed above 95% from a low point of 64.2% in 3Q01, during the last industry downturn, according to the SICAS statistics. The new report shows leading-edge technology (processes below 0.16 microns) running at 98.7% of installed capacity in the second quarter, with an average of 428,300 wafer starts/week during the three-month period. The buildup of leading-edge technology surged in the second quarter as installed capacity grew 14.0% from 375,700 wafer starts/week for sub-0.16-micron processes during 1Q.
Many industry analysts believe worldwide fab utilization rates will remain in the mid-90% range through the end of 2004, but then those levels will begin to drift lower as production capacity moves well ahead of market demand in 2005 and early 2006. IC Insights Inc., Scottsdale, AZ, estimates that installed IC fab capacity will increase 6.2% in the third quarter to 18.8 million 200mm-equivalent wafer starts, from 17.7 million in 2Q. The rate of increase will ease to 4.3% growth in the fourth quarter, pushing IC fab capacity to 19.6 million wafer starts in the three-month period, said Brian Matas, VP of research at IC Insights.
“We’re looking at a pretty significant drop off in fab utilization during 2005,” added Matas, referring to IC Insights’ projection of 83% utilization next year vs. an average of 95% in 2004.
The new SICAS report shows IC foundry capacity still expanding in the second quarter of 2004, as foundry capacity grew 10% to 188,700 wafer starts/week in 2Q compared to 171,600 in 1Q. IC foundry utilization reached 99.4% in the second quarter, up from 98.7% in 1Q and 87.0% in the same period last year, said SICAS.
The group also reported a 92.5% increase in 300mm wafer capacity during the second quarter. Installed 300mm capacity reached 51,200 wafer starts/week in 2Q compared to 26,600 in the first quarter this year. The report said 300mm fabs were operating at 95.7% of installed capacity in 2Q, up from 92.1% in 1Q. — J.Robert Lineback, Senior Technical Editor