Betting on a 2009 recovery? Not so fast
11/01/2008
Gartner now expects capex to slide even further this year (-25% to $47.1B) and will drop another 13% in 2009 to $41.1B, thanks to a full-on collapse in memory investments and economic pressures on consumer spending habits. Look for a pickup in 2010 (16.7% to $47.9B) and a bigger surge in 2011 (23.1% to $59.0B), and then another downturn in 2012 (-10.5% to $52.8B). For those keeping score, Gartner’s new outlooks for capital spending in 2009 and 2010 are both ~23% lower than they were just two months ago, erasing $11.9B and $14.6B in
anticipated spending.
Litho remains the strongest segment in wafer-fab equipment (WFE) spending with “only” a -15% decline in 2008 vs. the sector’s -26.1%, and factory automation (-13% software, -23% hardware) also will outperform the market, Gartner predicts. Deposition, etch, and implant (all around -30%) are the hardest-hit segments. Packaging and assembly (PAE) is seen dropping 18%, more than expected; automated test equipment (ATE) spending will fall nearly 27% thanks largely to softness in memory testers.
“The excess spending of 2006 and 2007 has hit home, and the equipment industry will continue to feel the pinch well into 2009,” writes Dean Freeman in a research note.
 Worldwide semiconductor capital & equipment spending, US $M. (Source: Gartner) |
Memory oversupplies have persisted, and now an economic crisis spreading to major economies in North America, Europe, and Asia will impact consumer electronic consumption, which in turn affects foundry and IDM spending, he said.
Memory spending will be down 36% in 2008 (DRAM -44%, NAND flash -23%) and nearly 17% in 2009 (DRAM -14%, NAND -22%), as excess capacity is absorbed and offline capacity is brought back into use. Despite recent moves to cut back production or eliminate capacity, “inventories of die banks need to be worked down until memory prices firm,” Gartner writes. Expect “a no-growth mode until 2010.”
Foundry spending will continue to be slow (-29% in 2008, -15% in 2009) as fabless customers remain conservative in moving to next-generation technology nodes, and in some cases will skip a node to amortize design and mask costs. Look for overall declines in logic spending of -16% in 2008 and -9.4% in 2009, impacted by the ongoing “fab-lite” movement, e.g. Sony, STMicroelectronics, and TI. Assembly and test services (SATS) firms will be comparatively strong vs. the rest of the industry, slipping only ~11% this year due to higher unit volumes, despite soft memory revenues and a shift in mix toward higher-priced packaging types.
WORLDWIDE HIGHLIGHTS
AMD is spinning off of its fab operations to a jointly owned venture with Abu Dhabi investors. The “Foundry Company” will possess AMD’s manufacturing assets and IP, including Fab 36 and Fab 38 in Dresden, Germany, with total value of ~$2.4B. The Advanced Technology Investment Company (ATIC), a technology investment company wholly owned by the Emirate of Abu Dhabi, will pay $700M for a majority stake, contribute $1.4B in new capital, and take on $1.2B in AMD’s debt. Mubadala Development will boost its stake in AMD to 19.3% with another $314M payout.
SEMI has acquired nonprofit trade association Surplus Equipment Consortium Network (SEC/N), with common goals to address needs in the secondary semiconductor equipment markets, such as new standards for liability and support.
Common Platform partners IBM, Chartered Semiconductor Manufacturing, Samsung Electronics, and ARM say they will develop a comprehensive 32nm and 28nm systems-on-a-chip (SoC) design platform based on high-k metal-gate (HK+MG) technology. Meanwhile, NEC Electronics formally became the eighth participant in the alliance.
After a last-chance deadline passed in August, Axcelis says it is no longer interested in further takeover talks with Japanese partner Sumitomo Heavy Industries, a deal that had been sweetened to about $630M with private equity support.
USA
Sanyo Semiconductor plans to expand its foundry business in North America, and also is building a new plant in Salem, OR, to make silicon ingot and solar wafers.
Microchip Technology and ON Semiconductor have pitched a $2.3B buyout offer to Atmel, under which ON Semi would take over Atmel’s nonvolatile memory and RF and automotive businesses, with Microchip selling the ASIC business and taking over the remainder.
NEC Electronics says it will approximately double 0.15??m production at its 200mm line in Roseville, CA, by March 2009.
NXP Semiconductors is selling its 200mm/0.25??m fab in Fishkill, NY, where it makes high-performance BiCMOS RF and high-voltage CMOS.
MEMC said its Pasadena, TX facility suffered no long-term impact on operations from Hurricane Ike, although about 15 days of production were lost due to supplier hiccups, at a cost to sales of $30M-$70M.
Semiconductor Research Corp. (SRC) and Cornell U. (backed by IBM) say they have developed a 3D electron tomographic approach for detecting chip defects, dubbed “incoherent brightfield,” with resolution down to ~2nm, using “equipment found in most metrology labs” and borrowing reconstruction algorithms and analysis routines from bio and medical imaging fields.
Mattson Technology is cutting about 80 workers (14% of its workforce) and will expand its outsourcing operations for systems it currently makes in Germany. Charges of $4.5-$5.5M will be made up with anticipated $6M in annual savings.
ASIAFOCUS
Formosa Sumco Technology is reportedly rolling out a king-sized 500kg silicon wafer ingot (vs. the normal 335kg ingot) to make 300mm wafers capable of producing 60% more chips, part of its plan to boost overall wafer output by 23%.
Samsung has made overtures to acquire SanDisk, which rejected the initial offer. Toshiba is said to be eyeing Spansion instead of its JV production partner.
Elpida says it’s developed a new 65nm shrink for its 1Gb DDR2 SDRAM that fits 20% more devices on a 300mm wafer (and thus lowers costs by 20%), targeting the shrink as a lower-cost option to other DRAM firms’ 50nm processes.
TSMC says its 28nm process will be a “full node” technology (not a shrink), offering both high-k metal gate (HK+MG) and silicon oxynitride (SiON). Initial production is expected in the first quarter of 2010.
Hynix plans to stop production at two more 200mm lines (leaving just one of its five 200mm sites running), to reduce output by 30% next year (-20% DRAM, -40% NAND flash). The company also has sold a ~10% stake in its Wuxi, China DRAM JV to Numonyx for $100M; its stake drops to 72.3%.
SMIC has purchased 200,000 sq. m of land in Shenzhen, China, for ~$17M to support production expansion, and says its S2/FAB 8 is its first chip production line to receive ISO 27001 certification.
Mitsubishi Electric reportedly has developed a way to achieve a record 18.6% efficiency for its prototype solar cells. The electrodes are half the usual thickness at 60??m, but twice as tall, which broadens the surface area for generating electrons without boosting electrical resistance.
Toshiba has widened its expected losses for the six months through September to ??50B instead of ??15B, and swinging to a ??65B loss for the full year.
Korean electronics conglomerate LG Electronics is negotiating a 75% stake in a solar module JV with German solar company Conergy AG, for a reported pricetag of $181M.
There’s reportedly been big top-level turnover at China’s Advanced Semiconductor Manufacturing Corp. (ASMC) - president/CEO Lu Hsueh Cheng is said to have resigned, as well as director/vice chairman Maria van Bommel and two other directors.
Following a third straight quarter of losses, Elpida Memory says it will reduce its DRAM output at its 300mm plant in Hiroshima, western Japan, by about 10% to 10,000 wafers/month.
Japan’s Organo Corp. says it has a new system for recycling hydrofluoric acid. Used hydrofluoric acid is mixed with calcium and powdered calcium fluoride to generate a crystalline material that is very close in composition to natural calcium fluoride, and can be used as the starting material to make hydrofluoric acid and other products???potentially saving hundreds of millions of yen annually in disposal costs.
EUROFOCUS
ASML says it has completed production design of a new “NXE” line of Twinscan-based EUV litho tools, and that its roadmap now extends EUV roadmap to “at least” 11nm.
Suss MicroTec has replaced board member and CEO Stefan Schneidewind with Christian Schubert, citing “differing views regarding the future strategy of the company.” His role reportedly will essentially be that of a COO, focusing on operations, structures, and processes; a new board member with a more technical background is being sought.
Renesas is selling its fab in Landshut, Germany, to Silicon Foundry Holding, a company formed by two of the site’s execs.