World fab forecast: Bottom in 2008 strong rebound in 2009

World fab forecast: Bottom in 2008, strong rebound in 2009

Big changes expected for Taiwan and Southeast Asia in 2009

Christian Gregor Dieseldorff

Sunday, June 08, 2008

Capacity: Japan still runs far ahead, Taiwan tries to catch up in 2009
After strong growth of over 17 percent in 2007, global fab capacity is expected to grow by 10 percent in 2008, and 8-10 percent in 2009. Slower spending in 2008 will result in slower growth of capacity in 2009. Japan is the region adding most capacity in 2008, followed by China and the Americas.

In 2009, however, Taiwan will add the most capacity, leaving China and South Korea, respectively, in 2nd and 3rd place for new capacity additions. For 2008, Japan is expected to maintain its lead with 24 percent of total worldwide capacity, followed by South Korea’s 17.8 percent, Taiwan’s 16.8 percent, and the Americas’ 16.4 percent.

Due to Taiwan’s surge in capacity in 2009, Japan will still lead with over 23 percent of the global capacity share, but Taiwan is expected to replace South Korea in 2nd place of total capacity.

For the first time in history, the overall capacity of volume fabs for 300mm is expected to surpass 200mm capacity by 3Q08. This milestone is achieved with over 2.5x less 300mm fabs. Capacity for 200mm volume fabs will remain at same level while capacity for 300mm volume fabs is expected to grow at double-digit rates every year.

Trend for fabs begin construction and production
While 2007 had much activity in memory fabs and lacked capital expenditure by most IDMs, the year 2008 promises to push foundries to the front in terms of new fab activity. Foundries, rather than memory, have more fabs beginning construction and production in 2008. Foundries will still be ahead of memory for fabs that begin construction in 2009. But memory fabs will catch-up in 2009 as more fabs begin production.

About 12 new high-volume fabs will begin construction in 2008 (vs. 22 in 2007) and about 15-18 are expected to start construction in 2009.

Comparing regions, China and Taiwan are in the lead, with the most new fabs starting construction in 2008. In 2009, Taiwan will take the lead, with lots of memory and some foundry fabs.

About 16 new volume fabs begin production in 2008 (vs. 25 in 2007) and about 14-18 should begin production in 2009. Once again, in 2008, China is the region with the most new volume fabs beginning production (eight). Europe and the Mideast have three fabs. In 2009, however, Taiwan will have five fabs beginning production, and China only four.

The analysis of the World Fab Forecast report shows that we are close to reaching bottom in spending—perhaps by 3Q08—and a rebound in 2009.

Fab equipment spending by qyarter by region -- Source: SEMI

Construction spending by quarter by region -- Source: SEMI

SEMI Fab Database reports, such as the World Fab Forecast, are ideal tools for real-life market indicators and forecasts, because they are supported by data down to the fab level. These reports were the first (in October 2007) to correctly predict negative double-digit rates for capex on fabs equipping in 2008. Data show that fab activities such as capex for construction, fabs equipping, technology upgrades and capacity expansion will increase in 2009.

The weak market drives many IDM companies to cut back, putting projects on hold until market conditions improve. Meanwhile, many foundries experience increased activity, and they respond by increasing utilization rates and pursuing plans to expand capacity. Considering increasing demand for Memory devices, fab projects cannot be postponed indefinitely. They need to begin by 2009 at the latest, in order for IDMs to stay competitive.

SEMI has improved its Fab Capacity report by adding all the categories the World Fab Watch has and more. The new name of the Fab Capacity report is now World Fab Forecast. This report provides high-level summaries and graphs; in-depth analyses of capital expenditure, capacity, technology and products, down to the detail of each fab; and forecasts for the next 18 months. These tools are invaluable for understanding how 2009 will look, and learning more about capex for construction projects, fab equipping, technology level, and products.

The author is with SEMI Industry Research and Statistics, SEMI, USA

Source: SEMI