Fab utilization rates and new spending on fabs are both improving, according to analysts.

Christian Dieseldorff, senior analyst at SEMI, said the SEMI World Fab Forecast now calls for a 64% increase in fab spending for 2010, reaching $24B.

Capacity utilization is likely to reach 88% in the third quarter, about the same level as before the financial collapse, said Bill McClean, president of IC Insights Inc. (Scottsdale, Ariz.). IC Insights said capacity utilization was ~90% in 2007 and through the first three quarters of 2008. Then the rate plunged to 68% in Q4 2008, and reached its low point of 57% in Q1 2009 before rebounding to 78% in Q2 2009 as OEMs replenished inventory.

Fab utilization rates are headed back to pre-crash levels, according to IC Insights.

Though not sinking to the all-time annual low rate of 71.2% in 2001, IC Insights expects the average IC industry capacity rate for the entire global recession year of 2009 to drop to 77.4%. "Strengthening IC capacity utilization rates due to the tremendous capital spending cutbacks in 2008 and 2009 will cause IC ASPs to rebound, with annual increases of 5% forecast between 2010 and 2012," McClean said.

SEMI World Fab Forecast
SEMI said worldwide installed capacity is expected to decline by 2-3% in 2009 as 31 fabs close. Next year, capacity will rebound slightly, growing by 4-5% to ~21.5 million wpm (in 200 mm equivalents). "Most spending in 2010 is expected to go towards upgrading fabs rather than for expansion of installed capacity," Dieseldorff said.

About $14B of the expected $24B is expected to come from six companies: GlobalFoundries, Inotera (the joint venture between Nanya and Micron), Intel, Samsung, Toshiba and TSMC. The six companies "are expected to invest large amounts of money over the next two years while battling economic challenges," Dieseldorff said.

• GlobalFoundries, supported by its investment partner Advanced Technology Investment Co. (ATIC, Abu Dhabi), will invest $600M-$700M this year, and spending may exceed $1B for each of the next two years. ATIC has committed up to $6B over the next five years to fund the expansion of GlobalFoundries, he said.

• Inotera announced a $1.6B project to convert all of its fabs from 70 nm trench to 50 nm stack capacitor technology, using immersion lithography tools, Dieseldorff said. Inotera is backed by giant Formosa Plastic, the parent company of Nanya. Equipping the fabs is expected to start by the end of this year and extend well into next year, which may contribute ~$1B to fab spending in 2010, the SEMI analyst said.

• Intel announced that it would spend $7B over the next two years to upgrade existing facilities for 32 nm production. SEMI projects that ~$3B-$4B of this will be spent in 2009 and the remainder in 2010.

• Samsung is converting a 200 mm DRAM line in Austin to a 300 mm back-end-of-line (BEOL) line for NAND production, supporting the existing 300 mm NAND fab. SEMI's World Fab Forecast estimates Samsung's combined 2010 capex at ~$4B-$5B, mainly for the Austin conversion and for Line 15 and Line 16 in Korea.

• Toshiba seeks to raise $3B in global stock offerings to invest in its factories, the largest stock offering by a non-financial company in the past eight years. Toshiba may spend close to $1B this year, ~$2B next year, and likely higher than that in 2011, Dieseldorff said. The spending is supported by the increasing worldwide demand for NAND, which is expected to increase from ~7-15 billion gigabytes in 2009 ~30-50 billion gigabytes in 2011/2012, he said.

• TSMC has increased its capex plan twice this year, with the July update taking spending up to $2.3B this year and >$2B in 2010.