SAN JOSE — Capital expenditures and installed semiconductor manufacturing capacity is on the rise, and 2011 will be a record year for equipment expenditures, according to the SEMI World Fab Database.

Fab construction spending, however, will decelerate through 2012, the trade group forecasts.

The database tracks spending, capacity and technology node projects for every fab worldwide by company. Spending covers new and used equipment for production, pilot, and R&D fabs, including investments for LED device fabrication.

“2011 is expected to be a record year for fab equipment spending," said Christian Gregor Dieseldorff, senior analyst of fab information in the SEMI Industry Research and Statistics group. "Since February, some companies have increased capex guidance and, as a result, fab equipment spending should reach an all-time high of about $44 billion. The spending pace is expected to decline 6% to $41 billion in 2012, yet will remain the second-highest annual level on record. However, the number of new volume fabs starting construction is historically low, with potential implications for industry capacity plans in 2012 and beyond.”

Table 1. Equipment Spending (New and Used) including Discretes, by Wafer Size

The SEMI database indicates that 17 new volume fabs (including 13 LED fabs) have a high probability (>60%) of beginning construction this year. Excluding the LED fabs, SEMI predicts only four volume fabs will begin construction this year and another four in 2012. The SEMI fab database also now identifies candidates for investment in the potential transition to manufacturing on 450mm wafers. Sometime in 2012, the industry will likely see initial equipment expenditures for 450mm pilot development. Construction of the first 450mm ready facilities began last year, and more will begin construction this year. Overall fab construction spending slows this year and in 2012. 

Table 2. Construction Spending

The March 11 earthquake in Japan may have some short-term effect on utilization rates and capacity output, but will not have a significant impact on installed capacity. Recent fab capacity (not including discretes) growth seems to be leveling to below 10% growth annually.

Installed capacity is expected increase about 9% in 2011 and 7% in 2011. In 2010, the growth rate in capacity of foundry fabs surpassed memory fabs, and this trend is expected to continue in 2011, as Foundry capacity will increase by 13% while memory capacity will increase by 8%. Growth of LED dedicated fab capacity remains in the double-digits with over 40% estimated in 2011, though lower capacity growth is forecasted in 2012. Memory dominates the worldwide installed fab capacity with a 38% share of the capacity this year, followed by foundries with about a 29% share.

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