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Foundry glut looms ahead

Posted: 18 Apr 2011 ?? ?Print Version ?Bookmark and Share

Keywords:foundry oversupply? foundry glut? excess fab capacity? wafer demand?

After weeks of worrying about the chip supply chain, some quarters are now anticipating a leading-edge-foundry oversupply.

Gartner Inc., in a research note, said, "The foundry market is driving aggressive fab expansion plans, which will result in an oversupply situation in the foundry market by late 2011 or early 2012." Simply said, chip foundry giants TSMC, Globalfoundries, Samsung and UMC have excessively expanded fab capacity.

Others agree, including HSBC. Another firm, IBS Inc., has done a detailed analysis of the foundry wafer capacity of TSMC, Globalfoundries, Samsung and UMC. ''The conclusion from the analysis is that there will be large overcapacity in 2H 2011, 2H 2012 and even in 2013,'' said Handel Jones, president of IBS.

''This is a classic example of companies trying to gain high market share and being overly optimistic regarding total demand. Capacity is added in large increments, but demand growth is more gradual,'' he said in an e-mail. ''The companies that will have large overcapacity will experience large losses.''

In the second half of 2011, there will be a total demand for 127,000 wafers per month, according to IBS. But there will be a capacity of 262,000 wafers per month at that time, the firm pointed out. This includes 45/40nm, 32/28nm and 22/20nm technologies.

In the second half of 2011, there will be a demand for a total of 109,000 wafers per month based on 45/40nm technology alone, according to IBS. But there will be a capacity of 145,000 wafers per month at that time, according to the firm.

In the second half of 2011, there will be a demand for a total of 18,000 wafers per month based on 32/28nm technology alone, according to IBS. But there will be a capacity of 100,000 wafers per month at that time, the firm said.

In the second half of 2011, there will be a demand for a total of zero wafers per month based on 22/20nm technology alone, according to IBS. But there will be a capacity of 17,000 wafers per month at that time, IBS stated.

Don't expect foundry spending to slow down. And don't expect yields to greatly improve. ''Following a 35 percent uptick in TSMC's budget in 2011, ~42 percent growth at Samsung LSI, and a doubling of GlobalFoundries' spending, we see the foundry race not abating into 2012,'' said C.J. Muse, an analyst with Barclays Capital, in a report.


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