JUNE 11--A survey of semiconductor companies' capital spending plans by Strategic Marketing Associates (Santa Cruz, CA; www.scfab.com), a market research firm specializing in fab information, points to an increase of $3.6 billion this year, up 13% from a year ago. In 2002, worldwide capital spending totaled $28 billion. For the equipment and fab building industries, the last two years have been the worst ever. From its high point of $61 billion in 2000 to its low in 2002, capital spending declined by 55%, or $33 billion, in the two-year period, according to the latest issue of SMA's International Wafer Fab News.
Although worldwide spending will rise, spending by US companies will continue to decline. This year and last, US chip companies cut spending by nearly $8 billion. This represents 70% of all cutbacks industry wide during this period. As a result, US companies' share of worldwide capital spending has fallen to 30%, its lowest level since 1992.
In contrast, Asia-Pacific companies increased their spending by $3.4 billion this year and will outspend every other regional group. Their share of the industry's capital spending will account for more than 40% of all capital spending. Japan and Europe round out the remainder of the spending with 20% and 10% respectively.
"We're bullish on chip capital spending this year if the economy doesn't sputter or stall," comments George Burns, president of SMA. "Last year the ratio of capital spending to chip sales was the lowest it has been in 20 years. This suggests the industry has cut spending too much, is underinvested and therefore needs to increase spending to support projected increases in sales and the move to advanced technologies."
The survey concludes that while some companies are still cutting spending this year, increased spending will outweigh the cuts. For example, Intel is cutting spending, but DRAM companies are increasing their spending, as are many integrated device manufacturers. Additionally, the top three foundries, TSMC, UMC, and Chartered are also cutting spending, but this is balanced by the increase in spending by the "challenger" foundries (those not in the top three). And, it is expected that Japanese companies will also increase spending this year by as much as 25%.
