Date: 10/06/2009

New study by SEMI finds a trend of fewer but larger semiconductor fabs

The latest update of the SEMI World fab forecast database indicates the spending on front-end semiconductor fabs (construction and equipping) is dropping consistently every quarter since 2008, and on a year-over-year basis is expected to fall by 51 percent in 2009. On a global scale, construction spending is at its lowest level in 10 years. However, the latest data from the report suggest an increase in investments for both semiconductor fab construction projects and fab equipment in the second half of 2009, with the trend continuing into 2010. In 2010, investments in fab construction projects are expected to almost double and spending on equipping fabs may increase by as much as 90 percent year-over-year from the significant declines expected in 2009, according to the report.

Investments are actually increasing in the Americas, with a total quarterly spending increasing to almost US$1 billion, mainly due to major investments announced by Intel, as the company moves forward on a planned upgrade to 32nm. Globalfoundries (AMD spin-off) is also investing heavily in building a fab in Malta N.Y.

According to the report, 19 fab facilities closed in 2008, and about 35 facilities will close in 2009, though the number of closures should decline in 2010 as only 14 facilities are expected to close. Nine fabs are expected to launch operations in 2009. Overall the trend of new facilities commencing operations has slowed since 1995, due to the fact that most of the new fabs are 300mm Megafabs for memory production, meaning fewer but larger fabs are needed.

Worldwide installed capacity for 2009 is expected to decline by about three percent, mainly due to fab closures, however data from the World Fab Forecast show that installed capacity for 2010 could increase by about six percent. Memory and logic fabs are expected to take the biggest hit in 2009, with a decline in installed capacity of five to seven percent each due to fab closures.

It's a clear indication of fab-lite trend in semiconductor manufacturing. As the process node is approaching to 32nm and 22nm, the cost of such fabs puts a big wall for many organizations and regions that are thinking of getting into semiconductor manufacturing.
However this trend applies strongly for devices such as processors, FPGAs and high-density memories. There are lots of other semiconductor devices, which can be made using low cost bigger process nodes.