As many fab construction projects are put on hold or pushed out to end-of-year or into next year, spending on fab construction projects and fabs equipping will likely see double digit declines this year, according to industry association SEMI.

A recent analysis of SEMI’s fab database reports revealed that spending on fab equipment this year is expected to decline 15% compared to the 9% growth last year, reflecting a downward revision of the outlook reported in the October 2007 fab database report.

Foundry equipment spending is expected to drop by almost 10%, while equipment spending for the memory and logic/MPU segments expected to fall by 15 and 30%, respectively.

Spending on fab construction projects is expected to decline this year by 9%, compared to the strong growth in 2007, with 12 new volume fabs expected to start construction, representing a total capacity addition when fully operational of 1.53 million wafers per month (wpm) in 200 mm equivalents. The five biggest spenders on fab construction projects in 2008 are expected to be Flash Alliance (Toshiba/Sandisk JV), Samsung, Hynix, Rexchip (Elpida/Powerchip JV) and Powerchip.

At the same time, semiconductor manufacturing capacity is projected to grow by approximately 11% this year, with memory retaining the largest share of total fab capacity, and expected to increase to 41% from 38% last year.

Memory fabs are projected to increase capacity by 18% year-over-year, followed by logic/MPU, which are expected to see 5% growth, while foundries are forecasted to add about 8% more capacity.

On a macro level, the slowing US economy is expected to dampen spending on R&D this year, according a report from research firm Battelle Memorial Institute.

Total spending on US R&D is projected to rise about 3% to $367 billion from $355 billion, before accounting for inflation, and after accounting for inflation, the growth rate would be about 1.3%, Battelle reported in news reports.

The report’s author noted that overall slowing of the economy is much more than it had been last year prompting more cautiousness about R&D spending in the US. Since the late 1990s, R&D investment in the US has increased annually at rates of between 1 and 2%, after accounting for inflation. A year ago, Battelle estimated that spending would grow at 3% and maybe 4% annually, but is now predicted to grow 2% on the optimistic side, for each of the next 3 years.

By: DocMemory
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