SAN JOSE — Semiconductor fab equipment spending is expected to remain flat in 2012, then jump to record levels in 2013, according to the latest SEMI forecast.

Eight companies, including Samsung and Intel, have budgeted $2 billion or more on fab equipment expenditures this year, SEMI said, enough to maintain fab equipment spending at $38.85 billion (Table 1). Next year, spending will jump 17% to a record $45.5 billion.

While the outlook for fab equipment spending in 2012 was negative two months ago, key spenders like Samsung increased spending to record levels; Hynix increased its budget 23% to about $3.75 billion, while UMC increased spending from $1.6 billion to $2 billion. In addition, Intel increased spending much more than expected, to a historic high of about $12.5 billion. If macroeconomic factors improve and other companies adjust their capex plans, then equipment spending for 2012 could even cross into positive territory.

Table 1. Fab Equipment Spending (new and used)

Source: SEMI World Fab Forecast, Feb. 28, 2012 edition

The spending trend is expected to continue into 2013 especially for the foundry, system LSI, MPU and NAND sectors. Companies continue to invest in upgrades and leading edge technologies, and few are ramping fab capacity. SEMI’s Feb. 28 World Fab Forecast lists 192 facilities with equipment spending in 2012.

2010 was a good year for fab construction but 2011 was even better with a 24% increase year-over-year to $6.4 billion. For 2012, spending on construction is expected to decline about 28% to $4.5 billion. Data show an even further decline in 2013.

Coming out of the downturn from 2010 on, yearly capacity growth is five to 10% and is expected to stay modest for the foreseeable future. However, SEMI’s fab data shows rapid increases in fab equipment spending for some segments, leading to an increase in installed capacity.

While installed capacity for DRAM is expected to level out, flash capacity has been growing rapidly since 2010. The dedicated foundry sector will also undergo growth in installed capacity with the key contributors like TSMC, Globalfoundries and UMC.

Lower construction spending compared to recent years, especially on new fabs, raises some concern about available capacity beyond 2013.  Overall, the industry has tried to control installed capacity since coming out of the 2009 downturn. Now due to increasing demand, some segments, such as flash, foundry and system LSI, are experiencing a boost in installed capacity.

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