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300mm fabs to drive 2005 capex growth at 2 percent, says firm

Posted: 04 Mar 2005 ?? ?Print Version ?Bookmark and Share

The facilitation of 300mm wafer fabs will help maintain capital expenditure and cause chip capital spending to grow by 2 percent in 2005, according to market research company Strategic Marketing Associates.

In 2004 South Korea's Samsung Electronics Co. Ltd was the industry's top spender for the second year in a row, followed by Intel Corp. Both companies plan to increase their spending substantially in 2005 and each plans to spend more than $5 billion, SMA said. The industry's largest foundry, Taiwan Semiconductor Manufacturing Co. Ltd, also plans to increase spending. The bulk of the spending for Samsung, Intel, TSMC and seven other semiconductor companies who are increasing their capital spending, is to build and ramp production on 300mm diameter wafers, SMA said.

The bad news is that even with 2 percent growth in 2005 the value of the capital spending would still be 26 percent below the industry's peak level of spending in 2000.

"Although this year's level of spending will be up 57 percent from the low point in 2002. This is cold comfort for equipment makers because the current level of activity is still only equal to that of 1996," said George Burns, president of SMA, in a statement. "Equipment makers have improved the productivity so much, that chip companies can get away with spending less. The ratio of capital spending to revenue is only 20 percent this year, compared to 30 percent in 2000." SMA expects twenty-two fabs will begin equipping this year. The amount invested in these fabs when fully equipped will be almost $40 billion, the firm said. A first wave of 300mm production fabs began equipping in 2000. The second wave began in 2003 and the third wave is coming in 2005, according to SMA. As a result new fab activity is set to remain strong in 2005 and, if chip sales grow, capital spending will continue to grow into 2006.

- Peter Clarke

Silicon Strategies

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