June 10, 2009 – Fab spending has been sliding since early 2008 — well before the crippling global downturn later in the year — and is poised to sink to a 10-year low in 2009, according to recent data and projections from SEMI. But the good news is that 2010 could see a 90% surge in fab investments.

Investments in frontend facilities (construction and equipment) started to tail off as early as 1Q08, and quickly fell through the floor, according to SEMI; the group pegs a projected -51% for all of 2009 vs. 2008, and facilities closures will nearly double (35 vs. 19). Worldwide capacity will decline about 3% overall to 15M wafers/month (200mm equivalent), and twice that rate of decline (-5% to -7%) for the much-maligned memory capacity.

But looking at the quarterly picture, 2Q09 could be the bottom of the investment trough, with investments in both fab projects and equipment ramping up in 2H09 and into 2010 — and for all of 2010, fab investments could be nearly double (+90%) what they are expected to be in 2009. Activity in the Americas is notable, mainly thanks to Intel’s 32nm ramp (now ongoing) and GlobalFoundries proposed fab in Malta, NY (construction starting in mid-2009). Also note the total evaporation of investments in Asia, particularly Taiwan and Korea (heavily memory).

(Source: SEMI World Fab Database)

Several new fabs are expected to begin construction in 2009, according to a related report from Christian Gregor Dieseldorff of SEMI Industry Research and Statistics — three in Europe/Mideast/Russia, two in the Americas, including Globalfoundries which is the lone high-volume fab. As many as nine facilities will also commence operations (spanning the Americas, China, Japan, Taiwan, and Europe/Middle East); more than half (6) are 150mm and below, with three 200mm and a single 300mm fab. Also, three of this group are foundries, two are at universities, and the rest are for MEMS/discretes.

With a rebound in fab investment slated to start in 2H09 and through 2010, look for capacity to ratchet up. SEMI projects as much as a 6% increase in total installed capacity in 2010 to >16M wafers/month. Foundries, who watched utilization rates plummet into the 30% ranges, have already reported spikes in capacity back to the 60%-70% range and higher; SEMI sees them maintaining their installed capacity steady for the full year 2009 (~3.2M wafers/month) and increasing >9% in 2010. In 2010, perhaps seven facilities will break ground, of which five will be high-volume fabs.