Many of the top chip makers have already spent a significant portion of their capital budgets for 2005 — in the first quarter alone, according to IC Insights Inc. And even more distressing is that worldwide capital spending could fall by 32 percent in the fourth quarter of 2005, as compared to the first quarter, according to IC Insights (Scottsdale, Ariz.).

Last week, the market research firm raised its IC growth forecast from minus 2 percent to plus 4 percent for 2005. It did not change its forecast for capital spending, which calls for a 5 percent decline to $43.4 billion in 2005.

"The problem with the current semiconductor industry capital spending environment is that it is extremely 'front loaded,' said Bill McClean, president of IC Insights.

"IC Insights believes that the worldwide semiconductor industry suppliers as a whole spent 30 percent of their current annual budget in the first quarter of 2005," McClean said in a report. "Unless semiconductor companies raise their capital spending budgets over the remainder of the year, the last three quarters of 2005 will witness significant sequential declines in capital spending by the semiconductor producers."

In fact, 11 major chip makers have already spent nearly one-third of their capital expenditure budgets in the first quarter alone, he said.

This includes AMD, Chartered, Infineon, Intel, Micron, Philips, Samsung, SMIC, STMicroelectronics, TI, and TSMC. In fact, silicon foundry giant Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) has spent 47 percent of its capital expenditure target in the first quarter, he said.

By: DocMemory
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