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$1B capex club finds fewer members

Posted: 27 Jan 2009 ?? ?Print Version ?Bookmark and Share

Keywords:$1 billion capex club? IC capital spending? semiconductor industry?

In the midst of a major IC downturn, the "$1 billion club" for semiconductor capital spending is expected to see only five members in 2009, down from nine players in 2008, according to IC Insights Inc.

The "$1 billion club" is an exclusive group that is projected to spend $1 billion or more on capital spending this year. Overall, IC Insights is projecting that capital spending will fall for the second consecutive year, hitting $32.4 billion in 2009, down 30 percent from $46.1 billion in 2008. In 2007, capital spending hit $60.9 billion, the research firm said.

IC Insights said the projected members in the "$1 billion club" for 2009 include Samsung Electronics, Intel, Toshiba, Taiwan Semiconductor Manufacturing Co. and Hynix Semiconductor. In 2008, the members were Samsung, Intel, Toshiba, Hynix, Micron, SanDisk, TSMC, Infineon Technologies and Sony.

The list could change amid the crash in capital spending, which is expected to see some new and staggering lows in 2009. When combining the numbers from 2008 and 2009, capital spending is projected to fall by 54 percent over the two-year period, according to IC Insights.

In comparison to the last downturn, capital spending fell 37 percent in 2001 and another 29 percent in 2002for an aggregate total of a whopping 66 percent, according to the research firm.

On the bright side, capital spending follows a similar pattern, in which two down years are normally followed by an uptick the next year, said Bill McClean, president of the research firm, during a presentation here.

For example, after a down cycle in 2001 and 2002, capital spending jumped by 14 percent in 2003 and 52 percent in 2004, he said. And, after a down year in 2008 and what could be a disastrous campaign in 2009, capital spending is expected to jump 15 percent in 2010 ($37.4 billion) and another 22 percent in 2011 ($45.8 billion), he said.

In the overall chip market, IC Insights reiterated its forecast. The overall IC industry is projected to fall by 17 percent in 2009, according to IC Insights. IC unit shipments are projected to fall by 7 percent in 2009. In 2008, the IC business fell by 3 percent to $269.9 billion, but unit shipments were up 4 percent.

Analysts predict that the market will be grim in first half of 2009. The second half also looks shaky, but for the most part, visibility is poor. During a presentation, McClean stressed that the market should look at the business in a different light. Instead of looking at the market as a whole, "think quarterly," he said.

A quarter at a time
In 2010, there is expected to be a recovery. The IC market is projected to grow 14 percent in 2010, 15 percent in 2011, 17 percent in 2012 and 2 percent 2013, according to IC Insights.

Until then, it's gloomy. The MPU market is expected to reach $28.2 billion in 2009, down from $33.4 billion in 2008, according to IC Insights. The foundry market is expected to hit $16.4 billion in 2009, down 23 percent from 2008, according to IC Insights.

Memory remains a trouble spot. The NAND market is expected to hit $9.6 billion in 2009, down from $12.6 billion in 2008, according to IC Insights. The NOR market is expected to reach $5 billion in 2009, down from $6.4 billion in 2008, according to IC Insights.

The DRAM market is expected to hit $22.3 billion in 2009, down from $25.2 billion in 2008, according to IC Insights. But DRAM and other chip markets are projected to improve throughout 2009.

"On a quarterly basis, we will see a recovery in DRAM," McClean said. In fact, for all IC markets, "we need to think quarterly."

Going forward, it's not a doom-and-gloom scenario. "Every global recession is followed by a boom period," he said. "Recessions (enable) pent up demand, especially in the electronics industry."

- Mark LaPedus
EE Times





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