AsiaFocus
08/01/1999
FY99 sales to rise, but Japan's chipmakers cut capex again
Despite an expected uptick in sales during the current FY99 (which began April 1), Japan's top 11 semiconductor makers are planning yet another reduction in capital investment - their third consecutive annual spending decline.
Among Japan's first-tier chipmakers, only Sharp, Hitachi, and Matsushita are planning investment increases; the latter two are quite modest, while Sharp's intended 44% rise comes off a very low spending level in FY98 (see table). NEC will cut its investment by 13%, to ¥130 billion (about $1.08 billion), with Toshiba making an 8% cut to ¥110 billion, and Fujitsu a 20% cut to ¥65 billion.
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As a group, the 11 companies expect to spend about 7.5% less than last year, or ¥624.5 billion. This represents just 12% of anticipated semiconductor sales, well below the approximately 21% level that analysts cite as the proper outlay to maintain leading process technology. As a rule, the spending will be focused on device shrinks in existing fabs rather than new facility construction; none of the firms have a solid timetable for adopting 300mm wafers.
There are a handful of exceptions to the "no new lines" rule. NEC will spend some ¥25 billion to establish a new wafer processing facility in Tsuruoka, Yamagata Prefecture. Sony Computer Entertainment, Tokyo, is spending a total of ¥120 billion (¥50 billion at Toshiba's Oita Works, and ¥70 billion at Sony's Nagasaki Plant) for the PlayStation 2 video game's key chips. Also, Rohm has purchased Yamaha's latest semiconductor plant.
Underlying the restrained capital budgets are significant chip-sector losses posted by many of the top firms. NEC's semiconductor unit lost an estimated ¥30 billion, Toshiba's some ¥50 billion, Hitachi's ¥100 billion, Fujitsu's ¥65 billion, and Mitsubishi's ¥50 billion, said company sources and industry observers.
On the upside, the 11 firms expect their total production for FY99 to be ¥5.296 trillion (about $44 billion), up 9.6% from the previous fiscal year.