Billionaire club reveals industry changes
The number of companies expected to spend at least $1.0 billion on semiconductor capital equipment is forecast to fall to its lowest number in more than 10 years in 2009, according to IC Insights’ recently released Mid-Year Update to The McClean Report. Only three companies, Intel, Samsung, and TSMC, are expected to have capital outlays exceeding $1.0 billion in 2009, down from eight companies in 2008, and 16 companies in 2007. As shown in the figure, these three companies alone have been part of the “Billion-Dollar Club” every year since 2000.
As shown, the billion-dollar spenders accounted for a record-high 74% of worldwide semiconductor industry capital expenditures in 2007. This figure fell to 56% in 2008 and is expected to drop to 43% in 2009. While only three companies are expected to spend $1.0 billion or more on capex in 2009, they will represent a very significant amount of the total worldwide semiconductor industry capital spending for the year.
The average amount of capex spent by companies on the billion-dollar club list is forecast to be $3.84 billion in 2009, up 28% from $3.01 billion in 2008. Intel ($4.7 billion) and Samsung ($4.5 billion) will spend significantly more than the average, while TSMC has budgeted $2.3 billion. Intel (-10%) and Samsung (-33%) are forecast to spend less than they did in 2008, while TSMC’s planned capex is up 23% from its 2008 spending level.
Capital spending as a percent of semiconductor sales reached a record low of 16% in 2008. With only three companies dedicating $1.0 billion or more for capital equipment in 2009, this ratio is forecast to move even lower, to only about 12% this year! As described in the Mid-Year Update, IC Insights believes that these record low capital spending as a percent of sales ratios will lead to much stronger IC average selling prices (ASPs) beginning in 2010 and extending through 2012.
