Analyst warns of upcoming “Big 4” foundry capacity crunch

August 7, 2007 – After starting the year with less than 80% capacity utilization rates, major chipmaking foundries are about to find themselves with a shortfall of capacity lasting several quarters, and potential customers need to act quickly to secure needed capacity, according to data compiled by IC Insights.

TSMC, UMC, SMIC, and Chartered — which make up nearly three-fourth of total worldwide pureplay foundry capacity, and almost all of the 90nm-and below capacity — posted a combined capacity utilization rate of only 78.5% in 1Q07, but brisk business is expected to surge those levels to nearly 98% by 4Q07, the firm noted. They also will ship 42% more wafers in 4Q vs. 1Q, three times the expansion of its wafer processing capacity (14%).

Individually, TSMC is seen jumping to an even 100% capacity by 4Q, up from 83% in 1Q, while UMC will show an even more dramatic turnaround — 70% in 1Q to 95% in 4Q. China’s SMIC, which has cut its capex over the past three years, will see those reduced investments come back to roost as its wafer shipments rise, pushing utilization rates over 90% in 4Q. Chartered probably won’t get above 88% by 4Q, but is expected to rise above 90% sometime in 1H08, IC Insights noted.

“Given the remarkable turnaround in the Big 4’s capacity utilization during the first eight months of this year, IC foundry customers are strongly encouraged to begin attempting to secure their 4Q07 and 2008 capacity needs as soon as possible,” the firm urges, in a statement. It also noted that the top four foundries are “behind the curve” in capital spending and capacity additions (only 9% increase in 2007, following a “moderate” 8% increase the year before), but they should turn around to show the biggest increases in capital spending for 2008.


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.