News Article
Capital spending cutbacks put IC industry on “collision course”
With IC fab utilisation over 90%, higher IC average selling prices
forecast to result.
Current spending plans by IC
manufacturers worldwide will lower total semiconductor capital
expenditures by 15% to $51.7 billion in 2008 from $60.9 billion in
2007, according to new data presented in IC Insights' Mid-Year
McClean Report Update (to be released next week). Capital expenditure
estimates for 2008 have been sliding since the end of 2007 (-9%
projected in December and -15% now).
Overall, fab capacity utilisation is forecast to average over 90% in 2008, up from 89% in 2007. In 1H08, wafer fab utilisation stood at 91% worldwide. However, 300mm fab utilisation rates were at an extremely high level of 96% in 1H08, and it is worth noting that about 85% of all DRAMs and 32/64 bit microprocessors are now fabricated on 300mm diameter wafers. Considering the strong unit growth rates being seen in memory and logic ICs, there simply isn’t much wiggle room for additional cuts in capital spending budgets at most chipmakers, based on the latest analysis from IC Insights’ online Strategic Reviews database of semiconductor suppliers.
IC Insights expects 2008 capital spending as a percentage of semiconductor sales to be only 18%, which would be one of the lowest ratios over the past 30 years! All this is occurring while IC unit volume shipments are forecast to increase at a healthy 8% rate in 2008.
With a growing number of large IC companies outsourcing more products to foundries and major pure-play wafer foundries aiming to increase profitability by controlling capital spending, IC Insights believes the IC industry continues on a “collision course” with respect to supply, demand, and average selling prices or ASPs (Figure 1). IC Insights first identified this collision course in the 2008 edition of The McClean Report, which was released in January of this year. Tight supply conditions and rising IC ASPs are expected over the next five years. Capex as a percentage of semiconductor sales went from an average of 27% in the late 1990s to 21% in the early years of this decade. Moreover, IC Insights forecasts that capital spending as a percentage of sales will average only 17-18% between 2008 and 2012.
Overall, fab capacity utilisation is forecast to average over 90% in 2008, up from 89% in 2007. In 1H08, wafer fab utilisation stood at 91% worldwide. However, 300mm fab utilisation rates were at an extremely high level of 96% in 1H08, and it is worth noting that about 85% of all DRAMs and 32/64 bit microprocessors are now fabricated on 300mm diameter wafers. Considering the strong unit growth rates being seen in memory and logic ICs, there simply isn’t much wiggle room for additional cuts in capital spending budgets at most chipmakers, based on the latest analysis from IC Insights’ online Strategic Reviews database of semiconductor suppliers.
IC Insights expects 2008 capital spending as a percentage of semiconductor sales to be only 18%, which would be one of the lowest ratios over the past 30 years! All this is occurring while IC unit volume shipments are forecast to increase at a healthy 8% rate in 2008.
With a growing number of large IC companies outsourcing more products to foundries and major pure-play wafer foundries aiming to increase profitability by controlling capital spending, IC Insights believes the IC industry continues on a “collision course” with respect to supply, demand, and average selling prices or ASPs (Figure 1). IC Insights first identified this collision course in the 2008 edition of The McClean Report, which was released in January of this year. Tight supply conditions and rising IC ASPs are expected over the next five years. Capex as a percentage of semiconductor sales went from an average of 27% in the late 1990s to 21% in the early years of this decade. Moreover, IC Insights forecasts that capital spending as a percentage of sales will average only 17-18% between 2008 and 2012.
