September 12, 2006 – Chinese semiconductor fab capital expenditures have whipsawed over the past three years — 118% growth in 2004, a 53% contraction in 2004, and more than doubling again in 2006 (see table, below). But next year Chinese fab capex is expected to be flat, and will extend to a relatively moderate 24.5% growth in 2008, according to data from SEMI.
Over the next two years, Chinese semiconductor fab capex is expected to exceed $9.8 billion, more than the total US capex from 2001-2005, noted SEMI, in a recent report based on a survey of major semiconductor manufacturers in China. Investments in 300mm facilities and advanced process technologies (entry-level process technology at the 0.13-micron node) are driving the growth — spending on 300mm equipment will account for more than 70% of total new fab equipment spending by 2008, with at least five new 300mm fabs in various stages of planning, construction, or tooling in China between now and then.
Fab projects without strong government support or backing from foreign partners will be challenged to keep up, according to Mark Ding, president of SEMI China. “Investment trends are evolving in China, with the future more promising for new fab projects by established semiconductor manufacturers compared to new entrants,” he said, in a statement. “Fab projects that bring advanced technology and significant foreign-investment will find financing and government support more readily available.”
Among other findings in the report, the annual growth rate of capacity added at China’s established fabs “is beginning to reflect real market demand” — about 16% annual capacity growth by 2008. Also, fab material spending could surge 58% in 2007 as the new 300mm capacity ramps up, and local fab equipment and materials segments are receiving more government support, and are seeking to forge alliances with local fabs.
Fab equipment spending in China (US $M)
2003 2004 2005 2006(f) 2007(f) 2008(f)
New fab equipment $901 $1929 $761 $1713 $1603 $1906
Total fab equipment $964 $2109 $1001 $2033 $2053 $2556