IC Insights has posted its estimates for capital spending by the top ten chipmakers this year as companies open up their wallets in expectation of cashing in on very tight supply through the rest of the year and into 2011.
The analyst firm expects the top ten to increase their spending by 67 per cent in 2010, a bigger jump than that expected for the entire industry. That is also set for a sudden leap in spending, up by 51 per cent, but it’s an indicator of how the big fab owners are gradually pulling away from the rest of the pack in terms of fab spending. Only the biggest can afford to operator fabs while the rest are forced to rely increasingly on foundry production.
Taiwanese foundry TSMC’s estimated spend this year is expected to surge by almost 80 per cent, “spurred on by the challenge from the upstart GlobalFoundries”, writes IC Insights president Bill McClean.
UMC has increased its own outlay dramatically but is already a long way behind TSMC and won’t even match GlobalFoundries this year following the incorporation of Chartered Semiconductor Manufacturing into the Abu Dhabi-financed foundry.
TSMC may only be $200m behind Samsung’s $5bn in terms of 2010 spending. Intel is predicted to pay out around $4.9bn for fab equipment this year and is easily the most conservative spender. However, the company didn’t cut back heavily last year when everyone else was taking an axe to their capital-expenditure budget. The company has a lot of its 32nm capacity in place ready for the launch of the Westmere generation of processors. And there is no point in contributing to a glut of processors when supplies of everything else will be tight.
The top trio alone — Intel, Samsung and TSMC — will account for 38 per cent of all capital spending in the semiconductor business this year. And more than half of the outlay from the top ten, which will represent two-thirds of the total spend.
Although these numbers are big, they won’t have much of an effect on 2010 chip supplies, McClean said at the recent IC Insights seminar in London. Although fab owners are now more efficient at getting tools up and running on the clean-room floor, it still takes several quarters for them to be productive. And the fab-equipment makers have to be able to service the sudden leap in demand having slashed their workforce once again in a sudden semiconductor slump.
However, the big fab owners will have an advantage in ordering: they have cash in the bank. Smaller players, such as the cash-strapped Taiwanese DRAM makers, will probably find themselves at the back of the queue for kit as credit will be in short supply.