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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?

Indeed, something has changed in the psyche of semiconductor manufacturers, said Malcolm Penn, founder and principal analyst with Future Horizons, at a recent event. They are no longer building wafer fabs in anticipation of demand. "Forget fab-lite, welcome to the fab-tight era," Penn warned.

Fab companies have been reluctant to build new plantsand for good reason. "At this point, there is little to no excess leading-edge 300mm capacity and more and more fabless companies are migrating onto the 300mm network as they migrate to 65nm process technology," observed Gus Richard, an analyst with Piper Jaffray & Co., in a recent report. "The foundries over the last five years have been (also) hesitant to add capacity ahead of demand as the tighter the supply, the better the pricing" and margins.

Forecasts and more forecasts
"Given the drastic cuts in semiconductor industry capital spending in 2008 and 2009 and a double-digit increase forecast for the IC market in 2010, 2011, and 2012, IC industry capacity utilization can be expected to remain relatively tight over the next couple of years," warned Bill McClean, president of IC Insights, in a report. "This in turn is forecast to lead to firming IC ASPs, extended lead times, and spot shortages."

In 2010, a 28 percent surge in wafer starts, coupled with the 6.4 percent increase in IC capacity, caused fab utilization rates to jump to 93.2 percent, up 15.5 percent over 2009, according to IC Insights. "For 2011, (overall) IC industry capacity utilization is expected to rise to 93.8 percent before falling back slightly to 91.3 percent in 2012," McClean said in the report.

Leading-edge, 300mm capacity is expected to remain tight. "Although in the 'ramp-up' stage, capacity utilization for leading-edge IC Insights also forecasts a 22-point swing in semiconductor market growth (32 percent growth in 2010 and 10 percent growth in 2011), a 2-point difference for electronic system sales growth (11 percent in 2010 and 9 percent in 2011), and a 0.3-point difference in worldwide GDP growth (from 4.2 percent in 2010 to 3.9 percent in 2011).

In IC Insight's most likely scenario, ASPs will see an increase of 2 percent in 2011, compared to 1 percent in 2010. Unit shipments are expected to grow 8 percent in 2011, down from 29 percent in 2009.

Jim Feldhan, chief executive of Semico Research Corp., said the IC market is expected to grow 8 percent in 2011, down from 31.8 percent in 2010. Capital spending is expected to grow 10 percent in 2011, with fab capacity hovering around 90 percent at the beginning of this year and cooling to 87 percent by year's end, he said.

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