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Fab firms' focus on 450mm could disrupt supply chain

Posted: 04 Feb 2011 ?? ?Print Version ?Bookmark and Share

Keywords:leading-edge fab capacity? 300mm fabs? 400mm fabs? IC supply chain?

Very few leading-edge fabs are being constructed to datea bleak scenario that could throw the IC industry into an even grimmer state of tight capacity, higher chip prices and shortages.

Capital spending is on the rise in 2011, but leading-edge fab capacity is expected to be tight for the foreseeable future for various reasons. Fab companies are reluctant to build new 300mm plants and are only upgrading their existing facilities. And at least three fab companiesIntel, Samsung and TSMChave suddenly become pre-occupied with 450mm activity.

It's unclear if fab companies will continue to build new 300mm greenfield fabs in the future. Perhaps they will bypass 300mm and simply take a quantum leap into the 450mm era.

Analysts have warned that there is not enough 300mm capacity right now. And costly 450mm plants are delayed and not expected to go into mass production until 2017 or 2018, according to IC Insights Inc.

What that means is that there could be a noticeable gap in the transition between 300- and 450mm, leading some to believe there could be possible disruptions and chaos in the IC supply chain.

It also leads some to believe that leading-edge fabs will become endangered species. Only a select few can afford to build leading-edge fabs today. Fewer will be able to afford 450mm plants. And only a few 450mm plants will be required to meet future IC demand, leaving the balance of manufacturing power in the hands of a select few.

Times have changed in the IC industry. Several years ago, nearly all chipmakers owned fabs. Then, in the late 1980s, the foundry business was born, fueling the growth of the fabless industry. Starting at that time, the integrated device manufacturers (IDMs) began to outsource a large percentage of their production to the foundries as a means to cut manufacturing costs. More recently, fewer IDMs can afford to build new fabs, as chip manufacturing costs have skyrocketed.

Amazingly, there are only three new 300mm fab projects slated to break ground for 2011 and 2012, compared to eight new plants in 2010, according to SEMI. The three new fab projects include those from Hynix Semiconductor Inc. (M12), Samsung Electronics Co. Ltd. (L17) and Taiwan Semiconductor Manufacturing Co. Ltd (Fab 15), according to SEMI.

Spending on new fab construction projects jumped 162 percent in 2010, but that number is expected to fall 11 percent in 2011 and another 26 percent in 2012, according to SEMI. "Currently, there is a bleak outlook in new fab construction plans," warned Christian Gregor Dieseldorff, an analyst with SEMI. "Companies (are) focusing their spending mainly on upgrading or ramping existing fabs."

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