Equipment Business Warms Up Amid Capex Spree
By Mark LaPedus, SemiMD senior editor
Heading into 2012, the fab equipment market and semiconductor capital spending looked gloomy.
Now, in the middle of the first quarter of 2012, business is looking up. Intel Corp. and Samsung Electronics Co. Ltd. have separately raised their capital spending plans. Then, on Wednesday (Feb. 8), Taiwanese foundry vendor United Microelectronics Corp (UMC) raised its capital spending for 2012. UMC is also readying its foundry offerings to enable 2.5D/3D chips.
On the down side, loss-ridden Chinese foundry vendor Semiconductor Manufacturing International Corp. (SMIC) lowered its capital spending from $800 million in 2011, to $430 million in 2012. And recently, Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) and GlobalFoundries Inc. separately lowered their respective spending plans.
“Equipment suppliers are becoming more optimistic about the year,’’ according to a new report from VLSI Research Inc. “As bookings improve, some are now forecasting a flat year versus a 15 percent drop. Much of the action is taking place in the foundry and SOC computing space, as chipmakers race to the 2xnm node.”
Now, for the bad news: “Memory in general remains subdued due to a struggling DRAM market. NAND activity has also been lackluster amid concerns of oversupply with some chipmakers delaying their capacity expansions,” according to the report. “DAO (digital, analog, and other) is also weak as utilization rates remain at very low levels following significant shifts of capacity from 200mm to 300mm in the analog space.”
VLSI Research maintains its fab tool forecast, which is expected to fall by 20.1 percent in 2012. The IC industry is expected to grow by 4.3 percent in 2012.
Barclays Capital also sees a mixed market. The firm’s bottom-up capex model now points to a 3 percent decline in 2012, compared to 16 percent growth in 2011. The wafer fab equipment market is expected to be flat to minus 5 percent in 2012, according to the firm.
One of the big surprises in capex was UMC. The company said revenue was NT$24.43 billion ($807.34 million) in Q4 2011, a 3 percent quarter-over-quarter decrease in Q3 2011, and a 22 percent year-over-year decrease. Net income was NT$1.18 billion ($ 39million) in the quarter, down 39.6 percent from the previous quarter and down 81.6 percent from a year ago.
UMC’s capital expenditure budget for 2012 is expected to be approximately $2 billion, up from $1.6 billion. Barclays projected that UMC would only spend $1 billion in 2012.
“Since the first quarter of the year is traditionally slow, UMC’s quarterly revenue will decrease slightly from the previous quarter,” said Shih-Wei Sun, CEO of UMC.
“UMC is optimistic about the demand for advanced mobile communication and computing chips. To capitalize on this opportunity, we will expand our comprehensive 28nm and 40nm foundry solutions. Our 2012 capex budget of $2 billion will help fulfill this commitment. However, we will not blindly add capacity. Instead, our investment plan is based on progressive stages of both advanced technology readiness and customer capacity requirements,’’ he said.
“As for 2.5D interposer solution, we have successfully taped out 2.5D interposer for 28nm and 40nm customers. We have also developed an open platform with back-end OSAT partners to extend our foundry services,” he added.
Meanwhile, SMIC’s revenue was down by 5.6 percent to $289.6 million in Q4 2011 from $306.9 million in Q3 2011 and down by 29.1 percent compared to Q4 2010. SMIC posted a loss $165.6 million in Q4 2011, compared to loss of $88.1 million in Q3 2011.
